4 ms·
First off, I agree with you on principle. I do think it is too prone for circumvention. Whatever criticism is thrown at you in detail, it can likely be adjuste
by yokaze 6y ago
First off, I agree with you on principle. I do think it is too prone for circumvention. Whatever criticism is thrown at you in detail, it can likely be adjusted in the contract accordingly.
So, keeping that in mind, (and that IANAL) lets develop it further.
I have trouble seeing that as being a legal contract, as all the rules are in favour/at will of the BigCo. I believe that renders such passages void in some jurisdictions.
E.g. It is hard to claim that you can sell at market-rate, if there is no free market, since the buyer is at BigCo's choosing.
Assuming it is legal, it leaves Jane completely at the risk of deprecation and the will of BigCo to make use of it, and leave Jane with the debt of the difference.
Selling a property is usually accompanied by a property sale tax (at least in Europe). One of the reasons a lot of private people found companies to actually own their property.
Worst problem though I see is, that BigCo is here at risk that there could be a regulatory change, which renders parts of the contract invalid, making Jane not only owner in name, but also in fact.
- lumost 6y agoThese contracts are private, as long as neither party seeks to break the deal - then no regulatory agency will intervene. Jane would be fighting a long battle with BigCo. In terms of economic bindings in the contract. It's possible to require Jane to have a nominal loan equal to the market value of the property due to BigCo. Jane would need to both claim ownership (hard), break out of the loan (harder), or go bankrupt.
- yokaze 6y ago> These contracts are private, as long as neither party seeks to break the deal - then no regulatory agency will intervene. Not sure about the US, but in many parts of Europe, contracts are subject to law, and cannot override it. But new laws can override existing contracts. I assume it is the same in the US, because all US contracts I saw contained an "Invalid Clauses"-clause: https://www.lawinsider.com/clause/invalid-clauses https://www.lawinsider.com/clause/invalid-clauses Aren't there any rules on loans in the US too? To my knowledge, there are strict limitations as to bundling of services. > Jane would be fighting a long battle with BigCo. Or not. If the case is clear cut.
- lumost 6y agocontracts are subject to law but minimal regulation. Bank loans are regulated - B2B load arrangements minimally so. My point was that Jane and BigCo have aligned incentives - as long as they aren't actually breaking a law then the contract will hold. Variable Interest Entities and similar loan arrangements are legal. Hedge funds regularly "lend" assets through hypothecation etc.