The Experts below are selected from a list of 168 Experts worldwide ranked by ideXlab platform
Tai-yeong Chung - One of the best experts on this subject based on the ideXlab platform.
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On the Social Optimality of Liquidated Damage Clauses: An Economic Analysis
The Journal of Law Economics and Organization, 1992Co-Authors: Tai-yeong ChungAbstract:The principle of freedom of contract rests on the premise that it is in the public interest to accord individuals broad powers to order their affairs through legally enforceable agreements that the courts will enforce without passing on their substance. Occasionally, however, a court will decide that the public interest in freedom of contract is outweighed by other considerations and will refuse to enforce the agreement or some part of it. In particular, contracting parties' power to bargain over their remedial rights is surprisingly limited. The most important restriction denies them the power to stipulate Damages that are so large as to be characterized as penalties.'
Sugata Bag - One of the best experts on this subject based on the ideXlab platform.
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Whither Contract Damages: Contracts with Bilateral Reliance, One-Sided Private Information
2011Co-Authors: Sugata BagAbstract:This paper explores the canonical contracting problem in a general set up of bilateral “selfish” reliance with post contractual one-sided asymmetric information that helps uncovering the shape optimal contracts and the optimal Damage remedy. The quantity choice of traded commodity is initially of binary type later extended to a continuous case. Reliance by the agents enhance individual valuations but not contractible. Information concerning either valuation or cost accrues to one of the two contracting parties, remains private – neither observable to other party nor even verifiable to court. In some state of world dispute arises, one party contemplates to breach (anticipatory). This paper categorically shows that in an Asymmetric Information scenario, a simple incomplete contract under a regime of court-imposed remedies often fail to provide right reliance-incentive to both parties simultaneously; also renegotiation does NOT help to restore ex post efficiency (as against the case of symmetric information). When breach victim’s expectation interest is difficult to be determined by court, how a direct revelation mechanism can solve the problem of moral hazard but assessing expectation Damages correctly turns out to be at odds with ex post efficiency is also explored. We conclude that party-designed Liquidated Damage measure is unconditionally superior to all other court-imposed Damage remedies.
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Whither ContraCt Damages: ContraCts With Bilateral relianCe, one-siDeD Private information *
2010Co-Authors: Sugata BagAbstract:This article explores the canonical contracting problem in a general set up of bilateral “selfish” reliance with post contractual one-sided asymmetric information, helping uncover the shape optimal contracts and the optimal Damage remedies. The quantity choice of the traded commodity is initially binary, but later extended to a continuous case. Reliance by agents enhances individual valuations but is not contractible. If information concerning either valuation or cost accrues to one of the two contracting parties and remains private – neither observable to the other party nor even verifiable by court, dispute may arise in some state of the world and one party could contemplate anticipatory breach. This article categorically shows that in an asymmetric information scenario, a simple incomplete contract under a regime of court-imposed remedies, often fails to provide the right reliance incentive to both parties simultaneously. Additionally, a renegotiation does not help restore ex post efficiency, contrary to what happens in a symmetric information case. When the breach victim’s expectation interest is difficult to be determined by court, a direct revelation mechanism can solve the problem of moral hazard, but assessing expectation Damages correctly turns out to be at odds with ex post efficiency, an issue that is also explored. We conclude that a party designed Liquidated Damage measure is unconditionally superior to all other court imposed Damage remedies.
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Two-Sided Informational Asymmetry, Bilateral Selfish Investment, Simple Incomplete Contract and the Legal Remedies
SSRN Electronic Journal, 2009Co-Authors: Sugata BagAbstract:In this paper, a setting of bilateral selfish reliance investments and post contractual two-sided asymmetric information is explored. Since the pioneering work of Rogerson (1992) and Hermalin-Katz (1993), it is by now well known that the comprehensive contracts can implement the first best even if the parties' valuations are private information and reliance investments are of selfish types (with quasi-linear utilities). However, surprisingly real world contracts seem to be rather simple. Most often parties come up with fixed-price incomplete contracts which are generally renegotiated later (if not prohibited by court). Hence, it is an interesting to analyse whether breach remedies can introduce the first best in this set-up. Some interestingly results are obtained: Both the parties tend to over-invest both under Reliance Damage and Restitution (i.e. no-Damage) Damage remedies. Courts usually adopt two disctinct methods - subjective and objective valuation - to establish breach - victim's expectation interest under asymmetric information. I conclude that the performance of expectation Damages falls short of what party-designed Liquidated Damage could achieve; however, first best is generally not achievable.
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Incomplete Contracts, Self-Investments, Asymmetric Information, Breach of Contract and the Legal Remedies
SSRN Electronic Journal, 2008Co-Authors: Sugata BagAbstract:In the early models of incomplete contract neither party used to invest in the subject matter of the contract; those models primarily kept their focus on analyzing the effect of legal rules on parties' incentives to trade or to breach. The modern models stretched beyond that to include value enhancing investments into its purview and establish an important result: (legal) penalties often are necessary to induce efficient investment; otherwise 'hold-up' (underinvestment) a general phenomenon when contracts are incomplete. But most of these models' findings are limited to typically symmetric or complete information scenario. In reality, the contracting parties usually possess some non-contractible private information either on their reliance or on their out side trading options or both (since either it is costly to describe or non-verifiable) and there may be ex-ante uncertainty associated with their valuations. So far asymmetric information has played a very limited role in the analysis of hold up problem. Therefore, in light of new and asymmetric information that the parties expected to realize subsequent to a binding contract, a systematic analysis has been attempted to see - first, how the legal remedies can solve hold up problem when parties also bear ex ante private information; secondly, how the courts of law can play a greater role than that has been realized. Focus remains on the ex-ante design of the contract, which would serve as an implicit substitute to complete contracts. Under asymmetric participation to contract, one of our main results shows that although the expectation Damage remedy maximizes the social surplus for the parties across different dimensions of asymmetry (uncertainty) but induces excessive reliance. It is also found that party designed Liquidated Damage remedy is superior to all other court imposed remedies when one-sided asymmetry is concern. Finally we show that when dual asymmetry (uncertainty) is present in a contracting situation a high Damage measure (even higher that expectation Damage) induces efficient reliance by the parties. These results bear serious implications for various contract doctrines and debates.
Nooh Abu Bakar - One of the best experts on this subject based on the ideXlab platform.
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Lean principles reduces resistance to change in transforming a shipyard operations
2018Co-Authors: Mohamed Shamaun Yushak, Rozzeta Dolah, Nooh Abu BakarAbstract:A Shipyard is trying to change but facing employee Resistance to Change (RTC). Resistance is attributed to the dysfunctional organisational context in the form of technical and political/structural discourse giving rise to non-conformance behaviour. An action research was conducted to identify the hidden underlying behaviour of the employees causing RTC and to implement change. The research found that RTC is due to incoherency of a person’s belief to establish standards, giving rise to cognitive dissonance. Lean production was used as an intervention to re-couple tasks to behavioural elements by reducing dissonance. Lean reduces dissonance, creates psychological flow, and momentum for change. As a result, the shipyard managed to recover the delay of a ship and delivered it on-time, with cost avoidance of millions of ringgits in Liquidated Damage. The Shipyard also managed to deliver subsequent ships on-time, compared to an average delay of 17 months, previously. The significance of this study is the realisation of how Lean principles challenge the underlying basic assumptions by creating self-awareness and improves self-efficacy. The study provides an exploratory model as to the workings of human behavioural elements in Lean production. The knowledge on how the researcher gained utility from resistance and mediate through the application of these techniques would be of considerable benefit to leaders of change management.
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The adoption of lean principles to reduce resistance to change in transforming a shipyard.
2016Co-Authors: Mohamed Shamaun Yushak, Rozzeta Dollah, Nooh Abu BakarAbstract:A Shipyard is trying to change, but facing employee Resistance to Change (RTC). Resistance is attributed to the dysfunctional organizational context in the form of technical and political/structural issues giving rise to non-conformance behaviour. An action research was conducted with the author as a participant researcher to understand and identify the underlying behaviour of the employees. Lean production was used as an intervention to re-couple tasks to behavioural elements. Resistance is due to incoherency of a person’s belief in established standards, giving rise to cognitive dissonance. Lean principles reduces dissonance, creating psychological flow in the workforce and the momentum for change. As a result, the shipyard managed to recovered the delay of a ship and delivered it on-time, with cost avoidance of RM63 million in Liquidated Damage. The Shipyard also managed to reduce the average delay for ships undergoing repair to 6 months, compared to previous average delay of 17 months. This research was a collaboration between the employees and the researcher to identify the source of RTC. The outcome is both, insightful in creating change and contribution to knowledge. The significance of this study is the realization of how individuals and groups’ past behaviour can subconsciously challenge the existence of the organization and better methods. The study provides an exploratory model on the workings of human behavioural elements in Lean production. The knowledge of how the researcher gained utility from resistance and mediate through the application of these techniques would be of considerable benefit to leaders of change management.
Larry G. Crowley - One of the best experts on this subject based on the ideXlab platform.
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DEVELOPMENT OF A PROCEDURE FOR UPDATING Liquidated Damage RATES USED IN ALDOT CONSTRUCTION CONTRACTS
2008Co-Authors: Wesley C. Zech, Larry G. Crowley, Clark B BaileyAbstract:This research effort sought to develop statistically justifiable means for developing a schedule of Liquidated Damage (LD) rates to be adopted by the Alabama Department of Transportation (ALDOT). The procedure outlined is to be used to review and update the LD rates found in ALDOTs standard specifications for highway construction contracts, since their current schedule and review procedure has come under legal scrutiny. After a review of pertinent literature on the subject, it was determined that there was lack of documentation concerning State Highway Agencies (SHAs) use of LDs. As a result, an electronic survey was created and sent out to all SHAs to determine the state-of-thepractice regarding the use of LDs by SHAs in construction contracts. This survey experienced a 100% response rate. Using the knowledge obtained from the survey, two statistically justifiable methodologies were developed to calculate LD rates using historical project cost accounting data including: (1) a traditional LDs provision based on FHWA guidelines with the LD rates stipulated in a table as a function of contract value, and (2) a more complex table in which the LDs rates are categorized by contract value as well as by project type (i.e. bridge, road, building, etc.). These methods were then compared to the current ALDOT procedure. The first methodology which stipulates LD rates in a table by contract value was determined to be the most robust method. The project type method successfully stipulated LDs by both contract value and project type, but assumptions were made concerning the project type designations due to lack of information in the historical project data, introducing bias to the procedure weakening its objectivity. The final product of this research effort is a set of stepwise guidelines for practitioners to reference when reviewing and updating their schedule of LD rates.
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Robust Determination of Liquidated Damage Rates for State Highway Agencies
Transportation Research Record, 2008Co-Authors: Wesley C. Zech, Clark B Bailey, Larry G. CrowleyAbstract:Liquidated Damages (LDs) in highway construction contracts are daily monetary rates meant to compensate the owning agency for additional costs incurred because a project did not meet its completion date because of contractor delay. When LD provisions are challenged in court, provisions that lack proper documentation outlining the procedure used to determine rates have been deemed a penalty and unenforceable. This research effort sought to develop a methodology for developing a schedule of LD rates to be adopted by the Alabama Department of Transportation (ALDOT). The procedure outlined is to be used periodically to review and update the LD rates found in ALDOT's standard specifications for highway construction contracts, since their current schedule and review procedure has come under legal scrutiny. A statistically justifiable procedure was developed to calculate LD rates using historical project cost accounting data to create a traditional provision based on FHWA guidelines with the LD rates stipulated ...
Mohamed Shamaun Yushak - One of the best experts on this subject based on the ideXlab platform.
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Lean principles reduces resistance to change in transforming a shipyard operations
2018Co-Authors: Mohamed Shamaun Yushak, Rozzeta Dolah, Nooh Abu BakarAbstract:A Shipyard is trying to change but facing employee Resistance to Change (RTC). Resistance is attributed to the dysfunctional organisational context in the form of technical and political/structural discourse giving rise to non-conformance behaviour. An action research was conducted to identify the hidden underlying behaviour of the employees causing RTC and to implement change. The research found that RTC is due to incoherency of a person’s belief to establish standards, giving rise to cognitive dissonance. Lean production was used as an intervention to re-couple tasks to behavioural elements by reducing dissonance. Lean reduces dissonance, creates psychological flow, and momentum for change. As a result, the shipyard managed to recover the delay of a ship and delivered it on-time, with cost avoidance of millions of ringgits in Liquidated Damage. The Shipyard also managed to deliver subsequent ships on-time, compared to an average delay of 17 months, previously. The significance of this study is the realisation of how Lean principles challenge the underlying basic assumptions by creating self-awareness and improves self-efficacy. The study provides an exploratory model as to the workings of human behavioural elements in Lean production. The knowledge on how the researcher gained utility from resistance and mediate through the application of these techniques would be of considerable benefit to leaders of change management.
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The adoption of lean principles to reduce resistance to change in transforming a shipyard.
2016Co-Authors: Mohamed Shamaun Yushak, Rozzeta Dollah, Nooh Abu BakarAbstract:A Shipyard is trying to change, but facing employee Resistance to Change (RTC). Resistance is attributed to the dysfunctional organizational context in the form of technical and political/structural issues giving rise to non-conformance behaviour. An action research was conducted with the author as a participant researcher to understand and identify the underlying behaviour of the employees. Lean production was used as an intervention to re-couple tasks to behavioural elements. Resistance is due to incoherency of a person’s belief in established standards, giving rise to cognitive dissonance. Lean principles reduces dissonance, creating psychological flow in the workforce and the momentum for change. As a result, the shipyard managed to recovered the delay of a ship and delivered it on-time, with cost avoidance of RM63 million in Liquidated Damage. The Shipyard also managed to reduce the average delay for ships undergoing repair to 6 months, compared to previous average delay of 17 months. This research was a collaboration between the employees and the researcher to identify the source of RTC. The outcome is both, insightful in creating change and contribution to knowledge. The significance of this study is the realization of how individuals and groups’ past behaviour can subconsciously challenge the existence of the organization and better methods. The study provides an exploratory model on the workings of human behavioural elements in Lean production. The knowledge of how the researcher gained utility from resistance and mediate through the application of these techniques would be of considerable benefit to leaders of change management.