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The Legal Plumage of an International Deal: A Study in Risk Analysis

James Barnes, Proceedings of 40th Annual Rocky Mountain Mineral Law Institute (1994)

As lawyers and negotiators we are familiar with the notion that a deal is the meeting of the minds of the parties. The parties may elect to enter into a document to evidence the transaction, but that document is not the deal. A document, even if statutorily required to make a deal valid, is nothing more than evidence of the meeting of the minds of the parties. However, the need for such evidence is manifest as deals become more complex, and as the individuals who constitute the minds of corporate and/or governmental parties become more transitory.

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In a complex deal the process of achieving a meeting of the minds among parties all of the same culture, speaking the same language, and familiar with the same legal system can, as we know, be trying. In a complex transaction where different cultures, languages, and legal systems interact, the process of achieving a meeting of the minds is not only trying, it is a very difficult and time consuming process.

In theory the negotiation of a transaction is the process of agreeing on the allocation of risks and rewards inherent in the deal, and the documentation of the transaction is the process of recording the agreed upon allocation. For a variety of practical reasons the theoretical line between negotiation and documentation has become blurred to the point that the document has become not only the rec