3 ms·
In either the debt or equity case if you simply remove terms they will generally be filled in by defaults based on statute, regulations, and case law. If the is
by bradleyjg 12y ago
In either the debt or equity case if you simply remove terms they will generally be filled in by defaults based on statute, regulations, and case law. If the issues around equity are inherently more complicated than debt, just settling for defaults doesn't much help. Both sides of the transaction are still going to need to familiarize themselves with those issues.
An analogy: most people take the default divorce law instead of writing a prenup, but those default rules are complicated, in many cases more complicated than what the parties would draft. So going with the default can save you time upfront (and awkward conversations) but it isn't generallly a good idea, especially if you opt not to understand what you are agreeing to.
- dragonwriter 12y ago> An analogy: most people take the default divorce law instead of writing a prenup, but those default rules are complicated, in many cases more complicated than what the parties would draft. Of course, prenuptial agreements may be less complex than "default divorce law", but they don't actually reduce the potential complexity of a divorce, because then the complexity becomes the complexity of the prenuptial agreement, compounded by the complexity of the rules governing the validity of prenuptial agreements (outside of restrictions on particular terms), compounded by the complexity of the rules governing the permitted terms in prenuptial agreements and the conditions in which particular terms are enforceable, compounded by the complexity of the default divorce rules (which cover both the areas that cannot be modified by a prenuptial agreement, and any areas left uncovered if the prenuptial agreement, or particular terms, fail.) So the prenup increases both the up-front and tail-end complexity.