The Modern Corporations Must Be Characterized As A Nexus Of Contracts ( Jensen And Meckling, 1976 ) Essay

This paper will discuss the reasons why CEOs are not being overpaid. It will apply the utilitarian ethical principle to many a few aspects to CEO compensation and whether or not it is justifiable for such pay. The paper will look at whether or not their performance is justifiable for the pay because they play such a big role in the livelihood of the company along with the principle agency theory and how it is being addressed for the benefit of the shareholders and others involved with the company, the supply and demand of the CEOs, and the paper will describe the comparison of other professions to help link the idea of CEOs being fairly compensated.

The particular focus of this essay is on how terms are implied. This is central because the courts intervene and impose implied terms when they believe that in addition to the terms the parties have expressly agreed on, other terms must be implied into the contract. Gillies argued that the courts have become more interventionist in protecting the rights of contracting parties thereby encroaching upon the notion of freedom of contract. The doctrine of freedom of contract is a prevailing philosophy which upholds the idea that parties to a contract should be at liberty to agree on their own terms without the interference of the courts or legislature. Implied terms can be viewed as a technique of construction or interpretation of contracts. It has been argued that the courts are interfering too much in their approach to determine and interpret the terms of a contract. The aim of this essay is to explore this argument further and in doing so consider whether freedom of contract is lost due to courts imposing implied terms. The essay will outline how the common law implies terms. The final part of the essay will examine whether Parliament, by means of a statute, or terms implied by custom restrict freedom in a contract. An overall conclusion on the issue will be reached.

Enforceable contract Peter v. Don. Peter will have an enforceable contract with Don if he can show that all the required elements of a contract are present. If there is a contract between the two then it will be governed by the common law requirements of an enforceable contract instead of the Uniformed Commercial Code, which would be used if their agreement had involved the sale of goods. In order for a contract to be formed between Peter and Don the two must react mutual consent Mutual consent can generally be formed through the form of an (A) offer and (B) acceptance. An additional requirement for both parties to show (C) consideration is also

Wally, business owner of Windy City Watches is located in downtown Chicago, IL. Business is booming and Wally needs to buy a large quantity of Rolek watches which sell for $50 apiece. He calls Randy Rolek, the wholesaler located in Milwaukee WI. They discuss terms on the phone for a while before coming to an agreement in which Wally offers to buy 100 watches for $25 each. Randy sends over an order form in which Wally states that he is agreeing to purchase watches from Randy for $25 each, but does not include the quantity in which he will buy. Randy sends 50 watches the following week with a note included stating that he has sent 50 watches and will send the other remaining 50 watches within a few days but includes the bill for the full

Bernie a resident of Richmond, Virginia decides to sale his 2006 Ford Fusion for $13,000.00 and places an ad in his local newspaper on February 1st. After several weeks without any inquiries, Vivian contacts Bernie on March 1st stating she will pay him $12,000.00 for the car. Bernie arranges to meet with Vivian on March 5th to complete the deal. Vivian comes to Bernie’s house on March 10th and says she will give Bernie $12,500.00 for the car; but she needs three additional weeks to come up with the money. Bernie agrees but only if Vivian puts down a deposit. Vivian agrees and Bernie drafts an agreement stated the sale will must take place no later than March 31st. Vivian reads and signs the agreement and

The purpose of the textbook, Who Rules America? by G. William Domhoff, is to explain his theory of Class Domination. My essay emphasises the relation of social class to power, the existence of a Corporate community, the relationship of the Corporate community to the upper class, and various methods used by the Corporate community to dominate the U.S Political System. Furthermore, my essay will discuss the potential limits to corporate power in America.

In the article “Corporations versus the Market; or, Whip Conflation Now,” Roderick T. Long argues that, there is a misconception between both the defenders of the free market and the critics of libertarianism. To explain, those who believe in the misconception think that the libertarian society is aligned with the capitalism society. However, this misconception prevents them from observing how corporations pervert and twist a natural free market. Ultimately, he argues that there can only exist an antithetical relationship between free markets and corporate power when libertarianism advocacy is not misperceived or is correctly perceived as pro-corporate apologetics.

In the book, The Corporation Joel Bakan presents arguments, that corporations are nothing but institutional pathological psychopaths that are “a dangerous possessor of the great power it wields over people and societies.” Their main responsibility is maximizing profit for their stockholders and ignoring the means to achieve this goal, portrays them as “psychopathic.” Bakan argues that, corporations are psychopaths, corporate social responsibility is illegal, and that corporations are able to manipulate anyone, even the government.

Lillard, Monique C., Fifty Jurisdictions in Search of a Standard: The Covenant of Good Faith and Fair Dealing in the Employment Context, 57 Mo. L. Rev. (1992)

It was reasonable for a CEO’s compensation to increase as the company expanded and became a larger entity, and the newly-granted shares and increasing stock options further aligned the CEO’s personal interests with those of the company and shareholders. In this sense, the second compensation package was also well-structured and not excessive. Seeing Sunbeam’s revenue rising and stock price climbing steeply upwards, Sunbeam’s shareholders and directors were fully convinced by Dunlap’s leadership, so they might perceive the increase in compensation amount necessary to retain and better motivate Dunlap to enhance the company’s value. Nonetheless, they neglected the fact that the increased portion of the equity-based compensation also further motivated the CEO’s dangerous behaviors pertaining to improper earnings management.

A recent study by Xue Wang (Emory University) tackles how SOX has affected the compensation and turnover rates of CFOs.   They play a critical role in developing firms’ financial reporting and making voluntary disclosure decisions.   Moreover, CFOs are ultimately responsible for the quality of internal control systems.   The study provides some important insights about the impact of SOX on the executive labor market.   It shows that requiring more disclosure of information about a firm’s internal controls provides some positive benefits with respect to corporate governance, in this case making it easier for boards to monitor the activities of CFOs.   In comparing and contrasting firms with strong internal controls received an increase in salary, bonus, and total compensation in the post-SOX time periods.   In contrast, CFOs of corporations reporting a problem with their internal controls incurred a significant reduction in their compensation packages.   With respect to CFO turnover, Wang did find that CFO turnover rates generally increased form the pre- to post-SOX period.

Given the effect a CEO can have on a company's success, we can understand why their compensation packages

The above formula isolates free cash flows to the firm from earnings before interest and tax (EBIT). It can be noted that FCFF are after tax (1-T) but prior to interest expense. This initial overstatement of due tax is by design; the tax deductibility of interest payments will be accounted for when incorporating the after-tax cost of debt in the weighted average cost of capital (WACC) to determine the present value of free cash flows.

Contractual agreements are supposed to be consensual, and freely entered into by the parties involved. Therefore, ‘before a court enforces a relationship as a contract, the courts must have a reasonably certain basis in fact to justify binding the parties to each other.’ (St. John’s Law Scholarship Repository, no date). Resolution of whether a contract was intended to be legally binding is not determined by what the parties themselves thought or intended. Rather, a more objective stance is taken by the courts. This is known as the objective theory of contract, and essentially enables ‘the courts to look at external evidence (what the parties said and did at the time)’ (Poole, 2006, p. 34), as to objectively indicate the parties’ intentions

On the formation of the Social Contract Theory has a long history, many people have formed Social Contract Theory has made a great contribution. Thomas Hobbes as one of the representatives of Modern Social Contract Theory, his departure from the theory of human nature, to a fictional state of nature as a starting point, put forward the basic principles of natural law, natural rights, and then through the Social Contract Theory, the establishment of his country theory. Thomas Hobbes certain extent, played a significant role, for people to bring enlightenment. But his theory does not apply in all cases; we need to analyze different aspects of different problems. In this essay, I will describe the Social Contract Theory, and explain the problem of how do we get out of the State of Nature raised by Hobbes Game. I explain the idea of cooperation that Thomas Hobbes can give to this problem, and then argue that this is not a satisfactory response to the problem for three reasons.