Subsequent Circumstances in Mergers and Acquisitions

Kasper Harsbo Pedersen & Jakob Nyvold

Student thesis: Master thesis


This Master thesis aims to examine how contracting parties in mergers and acquisitions should optimally regulate subsequent circumstances in the exercise of strategic contracting.
The legal part of the analysis will consist of a study of the Danish obligation and contract law related to subsequent circumstances occurring between signing and closing. Though, it is concluded that Danish national regulation associated to subsequent circumstances do not regulate properly. An analysis is found essential because the Danish law does not include a definition or regulation regarding hardship. Therefore, the analysis by means of lex mercatoria, German, French and English contract law determines hardship as terms of conditions related to the practice of hardship. On this basis, it is concluded that hardship obliges the fact, that subsequent circumstances cause a substantial shift in the balance of the contract, when the three conditions of hardship are met.
The economic analysis will be based on theory of Impossibility in Contract Law (Posner & Rosenfield 1977) and investigates how the contract agreement can be optimized with the suitable risk allocation. Additionally, the economic analysis will be based on theory of Contracts as Reference Points (Hart & Moore 2008) and investigates how the partnership between two contracting parties must proceed efficiently in a flexible contract environment, hereunder related to subsequent circumstances. It is concluded that the effective risk allocation will provide the correct alignment of reference points between the parties. When the contract is flexible, including the correct risk allocation between the parties will contribute to the most efficient management of subsequent circumstances.
The integrated analysis is based on Strategic Contracting and the most relevant observations of the legal and economic analysis. In the integrated section, it is concluded that proactive clauses are crucial in the contract relation regulation and management of subsequent circumstances in mergers and acquisitions. The proactive clauses are linked to the purpose of the contract, the obligation of loyalty, free communication as well as hardship and MAC. These clauses are vital clauses in the basis contract relation, which is the most effective management and regulation concerning subsequent circumstances in mergers and acquisitions in the exercise of strategic contracting.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
Publication date2023
Number of pages180
SupervisorsBent Petersen & Kim Ƙstergaard