This article asks whether a legal system that provides protection for commitments made prior to contract formation is more or less conducive to risk-taking by foreign investors than a legal system that does not. I surmise that increased levels of protection for precontractual commitments establish an environment more hospitable to new business development, giving potential entrepreneurs added security in their ventures. And I further surmise that different legal traditions provide different levels of protection for these pre-contractual commitments.
To better understand the risks faced by cross-border business investors, this article describes the key distinctions between legal systems that create potential liability for an unwitting investor and how they affect pre-contractual liability. It then links these risks with levels of investment by performing a quantitative assessment of the relationship between legal tradition and entrepreneurial activity, followed by a contextual analysis of conversations with cross-jurisdictional legal practitioners. It concludes by showing the distinctions in pre-contractual liability rules between civil and common law legal systems have a significant impact on potential investment.
Kevin J. Fandl JD, Phd,
Let’s Shake on it: Perceived Pre-contractual Risk in Cross-border Investment,
27 U. Miami Bus. L. Rev.
Available at: https://repository.law.miami.edu/umblr/vol27/iss2/4