In the analysis of vertical integration by contract versus ownership one event has dominated the discussion – General Motors' merger with Fisher Body in 1926. The debates have all been premised on the assumption that the ten-year contract between the parties signed in 1919 was a legally enforceable agreement. However, it was not. Because Fisher's promise was illusory the contract lacked consideration. This note suggests that GM's counsel must have known this. It raises a significant question in transactional engineering: what is the function of an agreement that is not legally enforceable.
Victor P. Goldberg,
Lawyers Asleep at the Wheel? The GM-Fisher Body Contract,
Industrial & Corporate Change, Vol. 17, p. 1071, 2008; Columbia Law & Economics Working Paper No. 316
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