Tuesday, March 17, 2009

The Sanctity of Contracts

This is a recent post by Glen Greenwald that points out that some contracts are more sanctified than others.
As any lawyer knows, there are few things more common - or easier -- than finding legal arguments that call into question the meaning and validity of contracts. Every day, commercial courts are filled with litigations between parties to seemingly clear-cut agreements. Particularly in circumstances as extreme as these, there are a litany of arguments and legal strategies that any lawyer would immediately recognize to bestow AIG with leverage either to be able to avoid these sleazy payments or force substantial concessions.
There's more here, in particular about why these particular contracts are so important to fulfill (because otherwise AIG will be able to retain the talent that has run their country into the ground).

2 comments:

Random Goblin said...

Lame. "There are ways to get out of contracts! Lawyers do it all the time!" Okay, name some, and explain how they would apply here.

Furthermore, explain why it is in AIG's economic interest to try to get out of its own contracts, balanced against the cost and burden--and risks--of litigation. In what way does the corporation benefit by this?

Furthermore, if AIG should try to litigate its way out of these contracts in bad faith, what contracts should it not try to litigate its way out of? Where should AIG draw the line, and why?

Greenwald is shooting from the hip and failing here, and he is wading into water that's over his head. He's not even touching on the relevant issues of corporate and contract law; he's just spouting leftist anti-corporate nonsense.

Bryant said...

Well at the link Greenwald juxtaposes the contracts entered into with AIG employees and the ones union workers (at GM I believe) enter into.

In the case of Union Contracts, it's not just acceptable but expected that in a downturning economy working class employees are going to have to give up raises and benefits. The sanctity of contracts doesn't apply as much to contracts entered into with working class employees.

But the employees of AIG seem to be in another class. They are so valuable to AIG that AIG must reward them or else run the risk of losing their valuable services.

I guess, like I say, it's because the workers at AIG are of a different class.