1 / 4

Gulati & Scott, 3 1/2 Minutes: Sticky Contracts

Gulati & Scott, 3 1/2 Minutes: Sticky Contracts. Karl Okamoto Earle Mack School of Law Drexel University. The “ABC” Model*. A clause will change if A < B – C. Where:. A is the cost of change, B is the expected value of the adverse consequence of “no change,” and

bianca
Download Presentation

Gulati & Scott, 3 1/2 Minutes: Sticky Contracts

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Gulati & Scott, 3 1/2 Minutes: Sticky Contracts Karl Okamoto Earle Mack School of Law Drexel University

  2. The “ABC” Model* A clause will change if A < B – C *Pat. Pending

  3. Where: A is the cost of change, B is the expected value of the adverse consequence of “no change,” and C is the risk that the adverse consequence will occur even if there is a change.

  4. The sense that the Elliott decision was aberrational and unlikely to be followed suggests B continues to be low • The sense that change is costly suggests A is high • The recent examples of trustee structures and limited rights to sue suggest that C is significant • The “short-term” horizon of government issuers suggest B is small • The fact that default is the triggering event and likely to be a supervening contingency suggests that C is high • Observation from other areas of practice that sovereign wealth is idiosyncratic also suggest B is smaller than A. • BUT finding in the companion paper that markets were affected by Elliott suggests that B is real (but relative value?)

More Related