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ohwilleke
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Islamic usury laws (which forbid all interest) and Islamic finance systems may shed light on Christian approaches to usury, as both arise from the same Iron Age Levantine milieu. One approach common in Islamic finance is to engage in a transaction which in Western legal terms is equivalent to piecemeal sale of tenancy in common interests in property accompanied by a straight lease of the TIC interests owned by the Islamic investor. In the ordinary transaction where there are no defaults in payments until the property is purchased in full, this is quite similar to a purchase money mortgage. But, it has some notable features: if the buyer can't make payments losses due to declining value are shared by the buyer and the investor; there is never a deficiency judgment. If the buyer sells before paying off the property, gains are shared by the buyer and the investor. And, perhaps most importantly, there is never compound interest. There are almost no ordinary consumer transactions in which compound interest accrues when the consumer is not in default. In economic practice, compound interest is purely a default remedy. And, compound interest has the capacity to make a loan much larger than the value of the financed property even at the original price. Thus, one feature of Islamic banking arising in a religious usury context is a focus on less harsh sanctions for default (which often involves someone who is broke anyway, with compound or default interest or deficiency judgments often awarded against people who couldn't pay even the regular payments). More generally, usury laws do not take issue with equity based investments, or arrangements such as sharecropping where a land owner gets a percentage of the gross crop in lieu of a fixed dollar rent. In general, the religious preference for equity over debt may reflect a preference for an economy that is more robust and leaves no one ruined in economic downturns. Equity financed businesses can survive weak economies much more easily than debt financed ones. A modern response to the policy ideas embodied in usury in a primitive economy might include: eliminating tax preferences for debt over equity in corporate finance; prohibiting default interest rates greater than non-default interest rates; prohibiting compounding of interest in consumer transactions (the focus on the poor in usury theology suggests that usury may be a concept only valid in consumer deal and not between non-subsistence merchants or corporations); and disfavoring deficiency judgments due to declining property values beyond the control of the debtor (perhaps by requiring a foreclosure bid to be no less than the original loan amount).
The failure to the U.S. Chamber of Commerce report to lay out the raw numbers that are the basis of its conclusion invites some skepticism, although it appears that when you take the raw numbers that they do mention that you can back out the raw numbers. It appears that there were about 250 lawsuits of this kind over a two year period involving about 50 mergers over two years. The "before" figure was a bit over 55% of big mergers being affected v. 90% "after", so about 15 more mergers had any lawsuits than would have been expected based upon previous trends, and the number of lawsuits per merger increased somewhat. But, the lion's share of suits resolved within 100 days in exchange for language adjustments in the disclosure documents without a monetary settlement (a situation where there is no non-judicial formal process in which to insist upon such a thing) and a significant share of the balance are voluntarily dismissed or non-suited in the first 100 days. This looks more like a speed bump arising from insufficient means of soliciting input than a crisis. In a nation where there are many hundreds of thousands of lawsuits filed a year, calling an increase in 15 mergers involved in lawsuit over a two year period (in the wake of the financial crisis that muddied the waters for many deals) an "epidemic" seems a bit histrionic, particularly when the historical rate of lawsuits was already so high. Perhaps the high litigation rate is an indication that mergers of big companies ought to be pre-approved through a judicial process as a matter of ordinary course to facilitate involvement of interested parties in a once in a company lifetime event, rather than being left to chance. Private law already takes that approach in much lower dollar contexts that involve all of the assets of the person involved such as probate, guardianship, conservatorship, divorce, and bankruptcy. There are also public hearings open to all interested parties to pre-approve a variety of private business transactions such as boundary adjustments, mergers, subdivisions and rezonings of real estate, and grants and transfers of liquor licenses. Many mergers already require anti-trust and regulatory approval anyway, why not just develop one more judicial process to structure public airing of disputes over "everything else." All of the often fairly routine proceedings where litigation for pre-approval is automatic pale in significance and room for disagreement relative to $100 million+ corporate merger deals. Pre-emptive litigation as a matter of course would reduce the number of lawsuits by approximately 80% from 5 unstructured lawsuits per deal in a variety of venues, to 1 company initiated lawsuit per deal in a pre-chosen venue. The procedural consolidation and orderly process involved would likely reduce the aggregate litigation costs per lawsuit, as well as reducing the number of lawsuits involved from 5-15 to 1.
It bears noting that Delaware partnership law is the Revised Uniform Partnership Act (1997), adopted by Colorado and at least thirty other states including Delaware, which provides that "the association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership." See also, e.g., Colorado Revised Statute CR 7-64-202(1). The judicial interpretation that the elements of full contract formation be present to meet that standard, which has been adopted by Delaware as evidenced in the opinion referenced, is not a necessary, or even a majority, interpretation of that standard. The requirement that there be agreement on "critical elements" exceeds what the statutory language itself requires. Under the express terms of the act, while the business must be a for profit activity, no agreement or meeting of the minds regarding the manner of sharing of profits and losses, regarding relative control amongst the partners, or regarding ownership percentages or rights, or even regarding whether a partnership has been formed, is required, so long as the people agree that the business that they are actually carrying on the business together as co-owners. Both parties may incorrectly believe that a partnership has not been formed, because agreement to a formal statement of the rights of the parties has not been reached, when as a matter of law, it does exist. Once they carrying out of the business with a purpose of making a profit is established, the partnership is "pregnant" and the Uniform Partnership Act will provide the terms of the partnership agreement where there was no meeting of the minds as to what those terms were. The reason for a broad reading is that often people engage in economically significant activity despite not formally agreeing to many important terms. One of my very first case as a lawyer involved a floor plan financing for a car dealership. I duly prepared a mountain of loan agreements, security agreements, commercial guarantees, etc. and brought them to closing, only to learn that my client had delivered the funds several days before closing with no more of an oral agreement as to terms than that I, as my client's lawyer, would draw up a floor plan agreement for him to sign and bring the papers to him. In the context of partnerships, I recently prevailed at trial and later on an appeal in a case where the parties commenced demolition of building, sharing of some renovation costs, and drawing up plans for a potential remodel, with an intent to remodel the building for a profit. Draft partnership agreements were exchanged but no agreement was reached as to the terms (e.g. profit percentages or capital contribution amounts) and no partnership agreements were signed. But, because the parties jumped the gun and commenced carrying on the remodel on a for profit basis, with an intent that it be part of a partnership, without reaching an agreement as to these terms, the court held that there was a partnership, despite the fact that there was not a meeting of the minds as to many of the material terms regarding that relationship and upheld a jury award for breaches of fiduciary duty arising from that business association. While the Delaware court may be bound by precedent to rule as it did, I believe that the Delaware interpretation of the statutory language is incorrect as applied to gun jumping situations where acts race ahead of agreements as to the respective rights of people who have commenced acting as partners before reaching an agreement as to partnership terms. A broader rule encourages people to reach agreement before acting for risk of being stuck with a set of rules that they didn't agree to; the Delaware rule encourages starting deals with an understanding that trust evidence by substantial mutual action can be betrayed since no agreement on exact terms was reached.
Most of the critics of corporate personhood are liberals, but as a liberal myself, I think that they underestimate how powerful the corporate personhood concept is in making it possible to hold large economic enterprises involving many people accountable without knowing precisely who was involved, which is not public information. Vicarious liability is a powerful tool. The alternative of primarily individual liability with entity liability only based on senior policy maker fault that exists in civil rights litigation is not an attractive alternative.
Issue One seems possible, for example, by including publisher tags. I'm not sure that I could draw the line with regard to issue two. Romance is almost everywhere even in most "hard science fiction" and "high fantasy" (although alas, almost absent from the Lord of the Rings books, where the movie makers made a welcome change). But, I think that what you really mean there is "contemporary fantasy" which is notable for having paranormal/speculative fiction elements in a contemporary setting, much of which has strong romantic elements, and some of which has weak romantic elements. In contrast, most "real science fiction" is set in the future, and most "real fantasy" is set in the past, or in either case in a world completely separate for the real world.
This is particularly true in case of private law questions (such as the distinction between law and equity) as the U.S. Supreme Court's docket involves predominantly criminal, quasi-criminal (e.g. immigration offenses) and public law cases. Law v. equity distinctions remain a fertile issue in state courts, however. For example, the Colorado Supreme Court finally definitively resolved just last month, the question of whether equitable defenses are available to causes of action that sound in law (e.g. if the laches defense can be applied to a suit to collect a promissory note). Hickerson v. Vessels, 2014 WL 104142 (Colo. January 14, 2014) (holding that they were, as a consequence of the merger of the law and equity courts of the state in the late 1800s).
The most famous example of tying voting rights to taxation was in certain periods of the Roman Republic, IRRC. Fictionally, Heinlein's novel "Starship Troopers" imagines a world where military service is the key to acquiring the right to vote.
"The same thibng is true in the USA, of course, but why?" I'm not convinced that this is an accurate statement. While the default provisions of corporation statutes generally call for directors to be adult individuals (something not required of shareholders or registered agents), many corporate statutes are predominantly default rules and the requirement that directors be natural persons is not always expressly identified as not subject to waiver by the bylaws. Corporate general partners in limited partnerships, and corporate managers in LLCs are not uncommon, so in an ambiguous case, I'm not convinced that a court would hold that the natural person requirement cannot be waived by corporate bylaws. Practically speaking, what remedy could (and should) a court provide in a case where notwithstanding the default rules of corporate law, the shareholders have elected a corporate director for many years with their unanimous approval and no natural person has expressly accepted an appointment as a director with the liability that comes with it? If the entity director is undercapitalized, veil piercing may be appropriate, and if a natural person cast a vote on behalf of the entity director that was in some way tortious, perhaps the personal participation rule might apply. But, simply declaring the corporation not to have existed for want of a valid director for the previous years would almost always be a harsh and difficult to apply remedy.
Query if this isn't just a generational inevitability. Appellate judges are inevitably one of the oldest subsets of attorneys, and in the federal courts and many state courts they serve most of their post-appointment natural lives on the bench, at least as senior judges, if not as active judges. Appellate judges have almost always spent less time pre-appointment practicing law during the period when LLCs became commonplace than the attorneys litigating cases before them. Until Generation X and later judges are the majority on the bench, LLCs are not going to be intuitive for them. Yes, they all know the important legal points or can figure them out, but Freudian slips are going to happen. Of course, when a caption is incorrect, as seems to be the case in the Carepartners case, the fault is surely with the lawyers involved, and not with the Court.
The phrase, "Chinese Wall" is not a reference to the Great Wall of China. It is a reference to the fact that Chinese architecture frequently employs paper screens as interior dividers within buildings. These barriers separate the interior of the building not because they are intrinsically effective as barriers to sound or physically keep people out, but because a code of honor within Chinese society compels people in a building that has Chinese walls to respect those barriers despite the fact that they are easily breached or circumvented with peepholes or by listening at them. The analogy in the legal and ethical context is that even though there is no way that an ordinary law firm or corporate body can actually keep information of limits to other members of the firm as a matter of practical feasibility, that firms with elite professionals bound by codes of civility and honor can be trusts to respect the compartimentalization of information in firm out of a sense of ethical fair play and honor, because everyone recognizes that the barrier to lateral employment arrangements if the profession did not agree to treat each other honorably in this regard would harm the industry as a whole. Since the architectural form of paper walls supported by honor rather than physics to divide interior spaces is pretty much exclusive to East Asia and originates in China, the term is appropriate and is not in fact in the nature of an ethnic slur and more than terms like a "Dutch auction" to describe a form of conducting an auction in form originally invented in the Nederlands. If we are going to be P.C. we should do so placed on accurate etimologies for ethnic based terms.
Hurray for this new resource. We're fortunate that someone so qualified could be recruited to do the job.
One alternative that has been proposed would be to base corporate taxation not on income, but on market capitalization.
Toggle Commented Mar 29, 2011 on GE's tax bill at ProfessorBainbridge.com
The contrary position is that institutional investors do not engage in corporate governance due to fears of securities law liability such as insider trading, market manipulation, etc., and that given a safe harbor would act differently. They probably wouldn't see common cause with many "shareholder activists" of the current regime, but might show far less tolerance for directors who tolerated underperforming executives and gave them high compensation.