Merger Agreement Anomalies: A Case Study in Incomplete Contracts
Abstract
This article uses the ABA’s Private Target Mergers and Acquisitions Deal Points Study to interrogate a puzzle that I initially took for evidence of bad lawyering: the persistent presence of undefined or unaddressed terms in sophisticated acquisition agreements. Post-closing purchase price adjustments, representation and warranty insurance exclusivity, exclusive remedy provisions, and—most strikingly—the material adverse change (MAC) clause itself are all, in a nontrivial share of deals, left silent or vague on questions that seem central to what the parties are bargaining over. Rather than treat these gaps as drafting failures, I turn to the incomplete contracting literature to ask what work silence and vagueness might be doing. I show that the literature offers not one explanation but several, and that they are not mutually exclusive: strategic vagueness (Choi and Triantis), renegotiation-lever theory (Denis and Macias, Quinn), risk-allocation architecture (Gilson and Schwartz), delegation to a trusted forum—here, Delaware’s accumulated MAC jurisprudence—stickiness and agency costs in boilerplate drafting (Anderson and Manns), and “agreeing to disagree” (Ben-Shahar). Using the MAC clause as the central case study, I argue that the ABA data, properly read, actually vindicates rather than falsifies the strategic vagueness account. Ninety-eight percent of deals nominally “define” a MAC, but the core standard remains circular—defining a material adverse change by reference to materiality—while drafting effort is instead concentrated in an increasingly long and specific list of carve-outs. That two-part architecture is exactly what strategic vagueness predicts: precision where it is cheap and valuable across every deal, vagueness where specification cost is better deferred to the rare tail event that actually triggers litigation. I then examine two harder cases that resist easy assimilation to strategic vagueness: the small percentage of deals with no MAC definition at all, and the larger percentage silent on RWI exclusivity. I argue that the first is genuinely underdetermined by the frequency data alone, admitting of several competing explanations that happen to generate the same observable correlation. The second, by contrast, is better explained as a structural or signaling gap than as vagueness properly understood, since exclusivity is a binary allocation question rather than an open-textured standard. The larger methodological payoff is a caution against reading deal-points frequencies as revealed-preference evidence of efficient design without further cross-sectional data on deal size, structure, and counsel sophistication—data the published tables do not provide, and without which efficient deferral and lawyerly inattention remain observationally equivalent.
Between Decision and Dialogue: Ethical Limits and Practical Judgment in Labor Arbitration
Abstract
This essay examines when, if ever, a U.S. labor arbitrator may ethically encourage parties to pursue a negotiated resolution rather than proceed directly to an arbitral award. Drawing on comparative perspectives from Chinese commercial arbitration, Canadian labor arbitration, and U.S. public-sector factfinding, it questions the conventional American assumption that settlement facilitation is inherently inconsistent with the arbitrator’s decisional role. The essay identifies the principal ethical concerns raised by arbitral involvement in settlement—including coercion, confidentiality, role confusion, competence, and preservation of party autonomy—and argues that these concerns counsel restraint rather than categorical non-intervention. It then identifies recurring situations in which negotiation may better serve the parties than adjudication, including cases in which a nominal victory could produce harmful downstream consequences, contractual language restricts the arbitrator to unsatisfactory remedies, or an award would create unwanted precedent. Finally, the essay offers practical guidance for raising the possibility of negotiation without becoming a mediator, emphasizing transparency, neutrality, non-coercion, and respect for the parties’ continuing authority to resolve their own dispute.
Bruce M. Price and Anoosh Ali
Abstract
The question of what jurisprudential model should govern the question of who should be awarded an engagement ring following a failed engagement has vexed courts, wasted judicial resources, resulted in a morass of inconsistent and jurisdictionally varying results, and left parties uncertain and litigious for decades. The question has social, feminist, historical, and economic implications. Following the passage of Heartbalm statutes eliminating causes of action based on broken promises to marry, courts and legislatures have struggled with whether the engagement ring is unique, deserving of its own treatment. This story is intricately woven with the incredible marketing success of the De Beers corporation in structuring how couples worldwide view the connection between love, marriage and diamond engagement rings. Past frameworks have tried to fit their analyses within existing contract law doctrines, which either require a fault analysis that is not compatible with the myriad issues of failed relationships or a no-fault analysis which is jurisprudentially unmoored. Our modest proposal for reform suggests instead that courts apply a simpler determination that will shift the terrain of the court’s analysis of the intricacies of human relationships from fault to good faith. We suggest that courts confine their inquiry to whether the ring was given by the donor and received by the beneficiary in good faith at the moment of the exchange. We suggest that the giving of the ring be reframed to be a joint prayer, a hope for a successful relationship leading to marriage in an uncertain world.