The Darwinian Dynamics of Contracting

First-year law students typically learn that the terms of a contract represent a snapshot of the parties’ mutual intent, captured at the “magic moment” of contract formation. In reality, however, contractual sausage making is far messier than this idealized account admits. Even sophisticated negotiators can (and do) fall prey to inattention, bad planning, poor information, slothful mimicry, bad negotiating or decision-making skills, and more. And when they do, the contract terms they adopt may diverge from shared intent – sometimes substantially. In short, contracts are often the products of their environments, including political constraints, economic exigencies, and the inherent limitations … Read more

A “Majeure” Update on COVID-19 and MAEs

Beyond the extraordinary human toll it continues to exact, the coronavirus has thrown a pall of uncertainty over hundreds of corporate transactions that were signed and waiting to close at the pandemic’s onset. As we noted in our previous Blue Sky Blog post, an important factor for understanding the fate of these deals is the structure and scope of their force majeure provisions, known in transactional jargon as MAC/MAEs (henceforth ‘MAEs’). Our analysis utilized text analysis tools to evaluate historical data of MAEs in a population of M&A deals spanning more than a decade and a half (January 2003 … Read more

Coronavirus Is Becoming a “Majeure” Headache for Pending Corporate Deals

A folk proverb from the American West teaches that the most important ingredient of a successful rain dance is timing. And the timing couldn’t be worse for signed corporate deals hanging in the balance at the onset of the novel coronavirus pandemic.  As of this week, we estimate that there are just under 150 significant mergers and acquisitions (M&A) transactions signed and waiting to close, representing over half a trillion U.S. dollars in economic value. The fate of these deals has been thrown into considerable doubt by the COVID-19 crisis. And, in an uncanny resemblance to the onset of the Read more