This thesis examines how contracting parties can write a contracting scheme to secure optimal behavior in ex-post renegotiation. The purpose is to optimize future possible benefits that are not ex-ante contractible in complex, extensive contractual relationships. Notably, the thesis is based on the continuing work on transaction costs. As a consequence we develop a clause scheme of formal governance with rational parties. To develop the scheme the authors examine the existing renegotiations schemes and how these fail. The current designs in incomplete contract theories are based on effective distribution of bar-gaining power to govern renegotiation. However, the authors take a different approach. Instead we suggest a set of governance tools to keep parties in a state of equal bargaining power and compensation of investments. To verify uncontractible investments we develop a costly third par-ty who has the ability to examine the correctness of each party’s message. We show how to govern parties’ actions in a manner that means they invest to optimize benefits without constraint in complex cooperative environments. To transform the Economic model into legal remedies, we explore the possibilities within the Danish legal system of contract law. Like in other market based economies, the Danish contract law is based on two principles: freedom to contract and legal security. This means that parties are able to contract a clause scheme as sug-gested. We find that due to the reciprocity of the nature of future possible benefits the contracting law offers no judiciary rules to govern uncontracted future benefits. This means the parties must rely on judiciary rules within the law of the contract. In light of this we develop a clause scheme that has the same functions and legal consequences as our economic model. The thesis contributes to existing theory of renegotiation with the distinct focus on future possible benefits. We develop a legal scheme of clauses to secure contracting parties optimal incentives to act to maximize joint value. We point out certain limitations and suggestions as to future studies. However within our theoretical approach the result has merit as to how parties in complex, exten-sive contracts can govern future possible benefits.
|Educations||MSc in Commercial Law, (Graduate Programme) Final Thesis|
|Number of pages||114|