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Today, a California resident can incorporate her shipping business in Delaware, register her ships in Panama, hire her employees from Hong Kong, place her earnings in an asset-protection trust formed in the Cayman Islands, and enter into a same-sex marriage in Massachusetts or Canada--all the while enjoying the California sunshine and potentially avoiding many facets of the state's laws. In this book, Erin O'Hara and Larry E. Ribstein explore a new perspective on law, viewing it as a product for which people and firms can shop, regardless of geographic borders. The authors consider the structure and operation of the market this creates, the economic, legal, and political forces influencing it, and the arguments for and against a robust market for law. Through jurisdictional competition, law markets promise to improve our laws and, by establishing certainty, streamline the operation of the legal system. But the law market also limits governments' ability to enforce regulations and protect citizens from harmful activities. Given this tradeoff, O'Hara and Ribstein argue that simple contractual choice-of-law rules can help maximize the benefits of the law market while tempering its social costs. They extend their insights to a wide variety of legal problems, including corporate governance, securities, franchise, trust, property, marriage, living will, surrogacy, and general contract regulations. The Law Market is a wide-ranging and novel analysis for all lawyers, policymakers, legislators, and businesses who need to understand the changing role of law in an increasingly mobile world.
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The Law Market
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The Law Market
Erin A. O’Hara and Larry E. Ribstein
1 2009
1
Oxford University Press, Inc., publishes works that further Oxford University’s objective of excellence in research, scholarship, and education. Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With offices in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore South Korea Switzerland Thailand Turkey Ukraine Vietnam
Copyright © 2009 by Oxford University Press, Inc. Published by Oxford University Press, Inc. 198 Madison Avenue, New York, New York 10016 www.oup.com Oxford is a registered trademark of Oxford University Press All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of Oxford University Press. Library of Congress Cataloging-in-Publication Data O’Hara, Erin A. The law market / Erin A. O’Hara and Larry E. Ribstein. p. cm. Includes bibliographical references and index. ISBN 978-0-19-531289-8 1. Venue—United States. 2. Forum shopping—United States. 3. Forum selection clause—United States. 4. Conflict of laws—Jurisdiction—United States. 5. Domicile—United States. 6. Tax havens. 7. International business enterprises—Taxation—United States. 8. Income tax—United States—Foreign income. I. Ribstein, Larry E. II. Title. KF8858.R49 2009 340.068'8—dc22 2008018395
9 8 7 6 5 4 3 2 1 Printed in the United States of America on acid-free paper
EO: To Mrs. Long, my first-grade teacher, who knew even then that I would write books LER: To Ann
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Acknowledgments
Thanks to Stanimir Alexandrov Daniel Barham Margaret Blair Chris Brummer Frank Buckley Henry Butler Christopher Drahozal Larry Helfer India Johnson Bruce Kobayashi Geoffrey Miller Richard Nagareda Patricia Shaughnessy Bo Rutledge Jeffrey Schoenblum Suzanna Sherry Stephen Ware for helpful advice, comments, and id