Business Law Prof Blog

Let's Hope this Works & Happy Memorial Day

So, BP hasn't figured out the oil leak yet, but at least people are appreciating this country's great veterans who are no longer with us.  

Happy Memorial Day, and for all our sake, I sure hope BP can figure this out.

--Josh Fershee 

The Cruel Irony of Stock Market Competition

The past 20 years have seen the erosion of the "stock exchange" as the nucleus of trading information.  Technological advancements paved the way for what would develop into electronic communication networks (blessed by the SEC in 1998 via adoption of Regulation ATS).  A confluence of forces pushed for an end to NYSE Rule 390 (which had largely prohibited member trading in NYSE listings on other exchanges); the limitation was formally rescinded in 2000.  In 2005, the SEC passed Regulation NMS, furthering the desire of the 1975 Congress for cross-market trading. 

With the push for exchanges permitting/facilitating trading at their rivals came a concomitant emphasis on each exchange enhancing its own audit trail in a manner most meaningfully capturing its order flow.  Now, as the SEC and others strain to piece together the market swoon of May 6th, consolidated trading records is the popular remedy.  But such a concentration of previously dispersed data poses many collateral questions, chief among which are the following:

• Who would own the consolidated audit trail, both in terms of responsibility for its creation and profits from the sale of its daily numbers?  

• How are the triggers for circuit breakers to be set when such brakes presently vary among exchanges?

• Will exemptions for internalized customer orders (fulfilled by firms against their proprietary holdings) and alternative trading systems render meaningless a consolidated trail (which obligates only exchanges and trading associations) ?  

• How does this all effect the anonymity that firms enjoy by placing their large trades in lesser publicized market centers?

Perhaps the mandating of cross-exchange stock histories - and the likely resulting ease in trading reconstruction - is truly inevitable.  But many other painful (and costly) decisions will have to be made, both by the chief market players and their regulators.  And the price of any rushed solution may be the progress achieved for the consumer in recent times, as exchanges unable to meet new records requirements become less viable options for traders.

In sum, any inartfully imposed consolidation of data may further set markets apart.  Thus, this fix may not be as simple as its immediate predecessor (i.e., banning universally- disdained flash trading).  A summary of the consolidated audit trail proposed last week by the SEC is available at http://www.sec.gov/news/press/2010/2010-86.htm.

---JSC, 5/31/10   

The Cruel Irony of Stock Market Competition

The past 20 years has seen the erosion of the "stock exchange" as the nucleus of trading information.  Technological advancements paved the way for what would develop into electronic communication networks (blessed by the SEC in 1998 via adoption of Regulation ATS).  A confluence of forces pushed for an end to NYSE Rule 390 (which had largely prohibited member trading in NYSE listings on other exchanges); the limitation was formally rescinded in 2000.  In 2005, the SEC passed Regulation NMS, furthering the desire of the 1975 Congress for cross-market trading. 

With the push for exchanges permitting/facilitating trading at their rivals came a concomitant emphasis on each exchange enhancing its own audit trail in a manner most meaningfully capturing its order flow.  Now, as the SEC and others strain to piece together the market swoon of May 6th, consolidated trading records is the popular remedy.  But such a concentration of previously dispersed data poses many collateral questions, chief among which are the following:

• Who would own the consolidated audit trail, both in terms of responsibility for its creation and profits from the sale of its daily numbers?  

• How are the triggers for circuit breakers to be set when such brakes presently vary among exchanges?

• Will exemptions for internalized customer orders (fulfilled by firms against their proprietary holdings) and alternative trading systems render meaningless a consolidated trail (which obligates only exchanges and trading associations) ?  

• How does this all effect the anonymity that firms enjoy by placing their large trades in lesser publicized market centers?

Perhaps the mandating of cross-exchange stock histories - and the likely resulting ease in trading reconstruction - is truly inevitable.  But many other painful (and costly) decisions will have to be made, both by the chief market players and their regulators.  And the price of any rushed solution may be the progress achieved for the consumer in recent times, as exchanges unable to meet new records requirements become less viable options for traders.

In sum, any inartfully imposed consolidation of data may further set markets apart.  Thus, this fix may not be as simple as its immediate predecessor (i.e., banning universally- disdained flash trading).  A summary of the consolidated audit trail proposed last week by the SEC is available at http://www.sec.gov/news/press/2010/2010-86.htm.

---JSC, 5/31/10   

Playing Cards While the Oil Spews

The devil on my shoulder told me it was okay to blog about poker while the Gulf of Mexico is filling up with oil ... and I listened.

The 2010 World Series of Poker is underway.  Accordingly, I thought I'd pass on some poker news that might be of interest to readers of this blog.

Mint.com has an article on why some Wall Street firms are recruiting poker players.

Meanwhile, a recent book review brought The Poker Face of Wall Street to my attention.  The book is written by Aaron Brown, an executive director at Morgan Stanley (among other things), who is quoted as saying that "finance can only be understood as a gambling game."

Finally, over at The Huffington Post, Tony Hsieh, CEO of Zappos.com, provides an excerpt of his recent book wherein he describes "the lessons that I learned from playing poker and how I apply them in the business world."

SJP

Unnatural Disaster Is BP's, Not Obama's, Katrina (For Now)

In an interview on NBC’s Today Show this morning, BP CEO Tony Hayward stated that BP has “never in any sense sought to downplay this” disaster. This is hardly accurate, in my opinion. On May 18, Hayward said, “Everything we can see at the moment suggests that the overall environmental impact will be very, very modest.”

Although I doubt it, at the time, he may have even been right. However, this is the essence of “downplaying” the disaster. It sure would have sounded better if he had said something like, “While we expect that the overall environmental impact will be very, very modest, we recognize it could be worse. That is why we’re putting all available resources behind getting this thing under control.”

At least now he is calling it an “environmental catastrophe” and I had been thinking that Hayward finally appears to understand the gravity of the situation. After watching the rest of the Today Show interview, I’m not so sure.

Hawyard went on to say that BP’s response to the ongoing Gulf of Mexico oil spill was to “launch[] the largest response effort . . . this country has ever seen to a natural disaster.”

The thing is, this isn’t a natural disaster. This is not a natural oil fountain that has run amok. The volcano in Iceland: that’s a natural disaster. Hurricane Katrina (at least the storm) was a natural disaster. This is almost completely a man-made problem. Now perhaps Hayward's comment was a slip of the tongue in a stressful situation. That happens, and I can appreciate that is tough to avoid. My concern is that it was planned, in part to start lending credence to the silly notion that this is Obama’s Katrina and deflect blame (and perhaps liability). And no, it’s not.

The fact that Katrina hammered New Orleans and the rest of the coast was not President G.W. Bush’s fault. That was not in his control. The response and the organizations charged with responding were. That’s why it was his fault. Furthermore, hurricanes happened regularly. FEMA and other agencies (normally) know how to deal with these situations. And other than following Katrina, they usually have.

The oil spill, on the other hand, was BP’s fault (and their contractors). And I agree, it was the government’s fault, too. Minerals Management Service (MMS) absolutely should not get a pass on this. But recall who was in control of MMS for the vast majority of this decade. (Clue: Not Obama.) And note, unlike the response to a hurricane, the people with the technology, information, and ability to respond to this disaster are not at FEMA, MMS, or the Army Corps of Engineers. The only people who can fix this, who need to fix this, are the ones responsible in the first place: the people at BP.

Just imagine what would have happened six months ago if the President had suggested a new agency that would be trained and funded to clean up disasters like this, granted the authority to take over an oil well at the first sign of trouble, and this agency would be funded by a large tax on oil companies. You can be sure that the response would have been that the government shouldn’t be in this business because the oil companies are better trained, better prepared, and better able to respond to such problems. I guarantee it.

Yes, perhaps the federal government could have been swifter than it has been, especially with regard to protecting the coast. However, in this situation, President Obama’s primary mistake was likely listening to BP when they said they could, and would, handle the problem. I find it curious that many of the same people who often argue that government should stay out of the way of big businesses now want to lay blame at the feet of a president who did just that.

Now that the federal government and the President, personally, have taken over primary responsibility for BP’s mess, President Obama will be responsible for how fast and how well the clean-up occurs on his watch. If that goes poorly, then perhaps his response to this mess will fairly be called his Katrina. But let’s be clear: as of right now, this is Tony Hayward’s (and BP’s) Katrina.

--Josh Fershee

OTC Derivatives: Closing Clearinghouse Loopholes

My Akron Law colleague, Willa Gibson, has an excellent post up at the Akron Law Cafe arguing that the final version of the financial reform bill should include a grant of "rulemaking authority to the CFTC to identify the types of OTC derivatives transactions it believes should be cleared that have not been submitted to clearinghouses for clearing."  Such authority is apparently a part of the Senate, but not the House version of the bill.

SJP

How the Reckless Pursuit of Profits Can Lead to Jail

Russell Mokhiber of the Corporate Crime Reporter offers some very interesting thoughts on the potential for criminally prosecuting Massey and BP executives here.

In related news, the Wall Street Journal reports today that, "BP made choices over the course of the project that rendered this well more vulnerable to the blowout."

SJP

Just a Little More Shareholder Apathy

The Northrop Grumman Corporation filed its Form 8-K yesterday and reported:

The shareholder proposal to reincorporate the Company from Delaware to North Dakota under the new North Dakota Publicly Traded Corporations Act was not approved with a vote of 226,210,028 shares against, 13,350,892 shares for, and 1,974,740 abstentions.

This is not really shocking, as all the corporations--except American Railcar, which boasts Carl Icahn as majority shareholder--that have considered such a move have rejected the proposal. I have never thought that more than a handful of companies would actually make the move, although I admit I did think that there might be a few closer votes given the way the market has behaved in the past couple years.

Perhaps it is simply the case that shareholders really don’t want more of a voice in their corporations. More likely, though, I suspect that shareholders are, as a group, even more apathetic that I originally thought.

--Josh Fershee

Acharya on Trade and Development

Upendra Acharya has posted Is Development a Lost Paradise? Trade, Environment, and Development: A Triadic Dream of International  Law on SSRN with the following abstract:

International law, as it exists today, has been abused by developed nations in their position of power over underdeveloped nations. The right to development, first formalized by the United Nations in 1986 with the Declaration on the Right to Development, was meant to give people of the developing world a right to development. However, the right to development has been supplanted by the concept of sustainable development, as orchestrated by the developed nations. It was hopeful that organizations like the World Trade Organization would implement the right to development through trade; however, these organizations have become merely a tool for the developed nations and associated corporations to continue their dominance over developing nations. Environmental concerns in recent times have shifted the international focus from the right to development to sustainable development, and the right to development has been overlooked. A legal right to development must be recognized before sustainable development can be applied as a tool to benefit underdeveloped nations through environmental and trade-related policy.

ECC

Summer of George?

Seinfeld fans will recall neurotic George's declaration that he was going to end his second-guessing for one summer.  "A George divided against George cannot stand," he reasoned.

In stark contrast, the Supreme Court yesterday found the 32-team National Football League to be 32 separate entities for purposes of section 1 of the Sherman Act.  American Needle, Inc. v. National Football League et al.  The unanimous decision reversed a 7th Circuit holding dismissing a suit by the former owner of a non-exclusive licensing contract with the unincorporated association.  In his opinion, Justice Stevens emphasized that NFL teams "do not posses either the unitary decisionmaking quality or the single aggregation of economic power characteristic of independent action" in rejecting the NFL's self-characterization as one (large) business; likewise, the 7th Circuit's rationale that "NFL teams share a vital economic interest in collectively promoting NFL football" failed to carry the ball.    

While American Needle's case now goes back to District Court for adjudication, the Supreme Court decision has potentially far-reaching, practical consequences for both NFL players (who must negotiate collective labor pacts) and consumers (who often pay high prices for replica apparel to vendors heretofore enjoying exclusive licenses).  Further, the holding has ramifications for other leagues such as the NBA and NHL - will this be the end of the Summer of George for any of these groups? 

The Supreme Court decision is available at http://www.supremecourt.gov/opinions/09pdf/08-661.pdf.

---JSC, 5/25/10

 

Did Wall Street Make BP Spill Oil?

Like what appears to be most of the country, I have been following the on-going Gulf oil spill with great horror. As someone who comes from an energy law background, and who teaches and writes in the area (in addition to business law, of course), I find this whole event remarkable and intriguing, as well as appalling.

For now, I’ll focus on the business perspective: I will be curious to see how the derivative suit filed against BPs executives--Firpo v. Hayward et al., 2:10-cv-01430, U.S. District Court, Eastern District of Louisiana (New Orleans)--will play out. The complaint alleges that the BP directors “elected to cut costs, including safety and maintenance expenditures, in pursuit of profitable results to report to Wall Street.”

Ah, the evil Wall Street made them do it. I am starting to wonder if that may actually be viewed as a legitimate defense for the directors if this goes to trial. Judging from recent political statements and media reports, it seems that Wall Street has some mystical (and mostly evil) powers.

Personally, I don’t need the Wall Street boogeyman to find compelling in a derivative suit context the idea that BP may have cut some major corners. If BP’s directors really did ignore a number of safety concerns and fail to even consider what was needed to protect against/mitigate this kind of catastrophic disaster, then they have shirked their duties to their shareholders by putting hundreds of millions of dollars, if not the entire company, at risk. That’s a big “if,” of course.

Having been around the energy industry, I know that most of the people working on these kinds of deepwater projects are smart. Really, really smart. The fact that they can’t stop the gallons upon gallons of oil flowing into the ocean tells me something, somewhere, went even more wrong than we can appreciate right now. Whether that was a lack of resources or concern at the board level, I don't know. But something sure doesn’t smell right.

--Josh Fershee

Reform ! (I think)

The question of whether the Senate would progress the broad array of financial reforms passed by the House in December has been answered in the glorious affirmative. 

Among other things, the Restoring American Financial Stability Act would -

• Create a new consumer protection agency (to be "housed" within the Federal Reserve),

• Create a systemic risk council (staffed by heads of existing agencies such as the SEC and Treasury),

• Enhance derivatives regulation (with jurisdictional lines continuing to be drawn by the SEC and CFTC),

• Require registration of hedge funds (with exceptions for foreign private advisers, venture capital fund advisers, private equity funds not posing a market risk, certain small businesses and those eligible for an intrastate exemption),

• Give shareholders a vote on executive compensation (with such vote being nonbinding),

• Require certain securitizers to keep 5% of their products (with that number being increased or decreased by the SEC), 

• Impose the "Volcker Rule" ban on proprietary trading (on investments that "do not benefit clients"), and

• Impose a uniform fiduciary standard of care (but only on brokers advising institutions on swaps).

Among the notions that failed to muster support are -

• Authorization of private claims against credit ratings agencies,

• A standing fund for future firm bailouts,

• A statutory increase in SIPC protection, 

• The consolidation of banking regulators from 5 to 1,

• A tax on profits to pay for the TARP shortfall, 

• A ban on naked credit default swaps,

• The imposition of a uniform fiduciary standards upon both broker-dealers and investment advisers,   

• Limits on the size of institutions/re-implementation of Glass-Steagall, and

• A tax on excessive compensation.

          My old Professor at NYU liked to say that the SEC "went at a problem with a scalpel, while Congress used a hatchet."  Personally, in light of the compromises still to come as the Senate measure is "reconciled" with that of the House, I'm trying hard not to see the Reform as a largely symbolic gesture.  Overall, I find myself longing for the days of unpredictable, piecemeal, knee-jerk Congressional responses to specific market failures - those laws happened fast and had teeth!

--JSC, 5/24/10

Society of International Economic Law (SIEL) 2010 Conference Program

Colin B. Picker has posted the Society of International Economic Law (SIEL) 2010 Conference Program on SSRN with the following abstract:

The Second Biennial Global Conference of the Society of International Economic Law (SIEL) will be hosted by the University of Barcelona and its IELPO LL.M. Programme at the premises of the University of Barcelona from the 8th July to 10th July 2010.

Over the course of the last two decades, the communities of scholars, practitioners and others active in the area of international economic law have grown and diversified in ways that few could have predicted. The field of international economic law now includes a diverse array of participants and covers many new substantive issues. Inevitably, the term international economic law defies easy definition: it is at once a fully integrated part of public international law and an identifiable field in its own right.

This conference provides a venue for exploring many different faces of international economic law. Given that the aim of the Society includes fostering research in the area of IEL and promoting cooperation among all parts within the field, the SIEL Global Conference offers a forum for those inside and outside academia to share pedagogical and research methods, as well as to explore greater cooperation among the many different constituencies of the field.

ECC

Too Much Gleaning in Goldman

This response started as a comment, but grew and grew . . .

I think Stefan hit the nail on the head in his post when he said Washington Mutual's discomfort with Goldman had nothing to do with inside information. I do think there was (1) a concern that Goldman's "routine hedging would put unwelcome downward pressure on WaMu," and (2) a real trust issue. However, I'm not at all clear the trust problem is necessarily related to the use of "inside information." That is, I think that the Times reporters were reading more into the e-mail from former WaMu CEO Kerry K. Killinger than I would have when they wrote that Killinger "was concerned about how [Goldman] would use knowledge it gleaned from that relationship."

I pulled the referenced Killinger e-mail from the 666 (coincidence?) pages of the exhibits released by the subcommittee, and what I see is Killinger saying he doesn't trust Goldman. Period. He doesn't say why. To me, this is just like when I drove 2+ hours to buy my car from another dealer even though I had a dealer 3 miles from my house. After repeated interaction, I did not trust the local dealer. The dealer never did anything clearly illegal, I can look at the paperwork myself, and I know the product, but I still did not feel right about it, so I looked elsewhere.  (Car dealers, by the way are still angling for an exemption from the new Consumer Financial Protection Agency created by the Restoring American Financial Stability Act.) 

I agree that what the reporters saw in the e-mail COULD be what Killinger meant, but I also think it would be more accurate to say the article reflects what the reporters gleaned from the Killinger e-mail. Too much gleaning for me. 

In fairness, though, here's the e-mail so everyone can draw their own conclusions:

From: Killinger, Kerry K. . . . . 

Sent: Friday, October 12,20073:51 PM 

Subject: Re: Can you take a look at this before Monday and give your blessing? 

I don't trust Goldy on this. They are smart, but this is swimming with the sharks. They were shorting mortgages big time while they were giving CfC advice. I trust Lehman more for something this sensitive. But we would need to assess if they have the smarts we need.

Incidentally, to be clear, I don't mean to give Goldman a pass, at least at an ethical level.  I'm just not sure we've found the right lens through which to view their behavior.  For now, though, in my book they're right up there with my local car dealer. 

--Josh Fershee

Senate Passes "Restoring American Financial Stability Act"

The Senate has passed the Restoring American Financial Stability Act.  Next up is reconciliation with the House version.  Some of the key provisions (summarized here) include:

• Creation of a Consumer Financial Protection Agency (housed in the Fed--let the fox and hen house jokes begin).
• A variety of provisions designed to mitigate the systemic risk posed by "too big to fail" institutions.
• Creation of an over-arching systemic risk regulator.
• Funneling federal bank oversight to a single regulator.
• Increasing shareholder oversight of corporations (via increasing federalization of corporate law).
• Strengthening regulation of the derivatives market.
• Increasing oversight and regulation of hedge funds, credit rating agencies, and the insurance industry.
• Imposing fiduciary duties on broker-dealers, as well as investment advisers.
• Allowing for private aiding and abetting claims under the securities laws.  (UPDATE: Apparently, this part of the bill failed to go forward.)
• Requiring issuers of securitized products to keep some "skin in the game".

Jim Hamilton provides a much more in-depth analysis of the legislation here.  You can also find a series of posts by Stephen Bainbridge analyzing a variety of the underlying issues here.

SJP

When It Comes to Responsibility, Primary Does Not Mean Exclusive

The Wall Street Journal (among other sources) reports the BP and Transocean are back to fighting about who was responsible for one of the worst oil spill disasters in history. Obviously, this will be contentious, but I always find the public relations fights both amusing and disappointing.  

BP is saying it was Transocean's fault because they were "in charge" at the time. I don't know if that is true, but I suspect this will be the one of the key points of litigation down the road. Transocean's response is:  "As the operator of the well, BP has repeatedly acknowledged—under oath and in advertisements—that it is assuming full responsibility for this matter." 

On that one, all I have to say is: "And?"  

One can assume full financial responsibility for something without giving up their right to seek indemnity or contribution.  I certainly may have missed something, but I have not once heard BP it was their fault, simply that it was their responsibility. I agree that it is their responsibility (and it may be their fault, I just don't know), but I find the argument that BP's "assumption" of responsibility makes BP solely liable laughable, both from a legal and a PR perspective.  

I have lots of complaints about how BP has handled this matter, both before and after the spill, but I certainly hope taking primary responsibility for this disaster does not preclude BP from seeking contribution from others at fault.  If it's all on BP, so be it, but I want nothing out there discouraging people from taking responsibility for bad things that happen on their watch, even if it's not their fault.  

--Josh Fershee

Falaschetti on Corporate Governance

Dino Falaschetti has posted Democratic Governance and Economic Performance: How Accountability Can Go Too Far in Politics, Law, and Business on SSRN with the following abstract:

Conventional wisdom warns that unaccountable political and business agents can enrich a few at the expense of many. But logically extending this wisdom implies that associated principals – voters, consumers, shareholders – will favor themselves over the greater good when ‘rules of the game’ instead create too much accountability. Democratic Governance and Economic Performance rigorously develops this hypothesis, and finds statistical evidence and case study illustrations that democratic institutions at various governance levels (e.g., federal, state, corporation) have facilitated opportunistic gains for electoral, consumer, and shareholder principals. To be sure, this conclusion does not dismiss the potential for democratic governance to productively reduce agency costs. Rather, it suggests that policy makers, lawyers, and managers can improve governance by weighing the agency benefits of increased accountability against the distributional costs of favoring principal stakeholders over more general economic opportunities. Carefully considering the fundamentals that give rise to this tradeoff should interest students and scholars working at the intersection of social science and the law, and can help professionals improve their own performance in policy, legal, and business settings.

ECC

Goldman and the Use of Non-Public Information

I second Josh's recommendation of the recent New York Times article discussing Goldman's penchant for betting against clients.  It makes it almost impossible not to see Goldman as fueling the financial crisis, rather than merely responding to it.  The discussion of Goldman buying up default protection on A.I.G. while at the same time pushing that company closer to insolvency by demanding more cash to shore up an existing account smacks of manipulation. 

But the part of the article that stuck out to me the most was the report of an email message sent by Washington Mutual's former CEO in 2007:

In that message, Mr. Killinger noted that he had avoided retaining Goldman’s investment bankers in the fall of 2007 because he was concerned about how the firm would use knowledge it gleaned from that relationship. He pointed out that Goldman was “shorting mortgages big time” even while it had been advising Countrywide, a major mortgage lender.

What struck me about that passage was the reference to the use of knowledge "gleaned from" Goldman's relationship with WaMu.  To the extent this is related to WaMu's issuance of mortgage-related securities, I thought all the smart people agreed that all the material information needed to evaluate those securities was generally available.  If, on the other hand, the concern was simply that Goldman was such a big player that its routine hedging would put unwelcome downward pressure on WaMu--what does that have to do with inside information?  I'd be very curious to know what material information Goldman gleaned from its relationships with insiders.

SJP

Questioning Broker-Dealer Fiduciary Duties

The Wall Street Journal has an interesting Q&A with J.W. Verret regarding the proposal to impose fiduciary duties on broker-dealers.  Verret is against the proposal.

Verret is quoted as saying that Sen. Arlen Specter, the amendment's sponsor, "suffers from a fundamental misunderstanding of how markets function."  But wasn't it the people who claimed to know precisely how markets function who told us that banker self-interest would sufficiently manage risk-taking?

Verret also claims that if the proposal were adopted, it could "freeze up markets" and "destroy the market for some risky assets."  This seems a bit extreme to me.  As Bainbridge notes (quoting Justice Frankfurter):

[T]o say that a man is a fiduciary only begins analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary? In what respect has he failed to discharge these obligations? And what are the consequences of his deviation from duty?

In the corporate fiduciary context, we already have a great example of how the alleged costs of fiduciary duties can be mitigated by things like the business judgment rule and a 102(b)(7) waiver.  If necessary, the proposal could be modified to allow for similar concessions. 

Finally, Verret claims that: "We don't need new laws to go after fraud.  We haven't seen widespread securities fraud with one exception: Bernie Madoff."  Given the litigation yet to be resolved, I think it's a little too soon to be calling "game over" on that issue just yet.

SJP

Botchway on Negotiations

Francis N. Botchway has posted Can the Law Compel Business Parties to Negotiate? on SSRN with the following abstract:

Many businesses, national or international, would opt to negotiate differences between or among themselves. There are circumstances, however, where disputing parties are compelled to negotiate or re-negotiate out of necessity induced by law, by custom or by comparative efficiency expectations. This work evaluates the legal basis of international business negotiations and argues that negotiation is not always a choice, in many cases, it is the choice. It also argues that even though English law is quite ambivalent about the place of good faith in negotiations, contractual negotiations, including those mandated by the law, must be carried out in good faith.

ECC