The Valuation Adjustment Mechanism

Since Mengniu’s rapid development because of investment institutions such as Morgan Stanley, more and more enterprises favor VAM.However,three different trial results of "Haifu Case "put the effectiveness of VAM in a controversial position.Meanwhile,the legal nature of VAM also confuses many scholars.The first part of this paper is an overview of VAM, which introduces the concept and legal relation of it in detail.The second part researches the nature of the valuation adjustment agreement.Aleatory contract, conditional contract, accessory contract and innominate contract are the four main views.After the analysis of three former views, the paper will ultimately favor VAM as innominate contract,not only because of respect for the will of the parties, but also because it can create conditions for typifying legislation of VAM in the future.If the dispute of the nature of VAM is in the academic field, the dispute of the validity of the VAM has attracted the practice circle close attention.The third part takes "Haifu Case"for example, combining with common invalid reasons in practice launching an in-depth analysis of the effectiveness of VAM,and ultimately draw a conclusion that the VAM should be valid.But as long as the validity of the VAM doesn’t get the law’s final confirmation, legal risk will still exist.Therefore,I give some suggestions for the related subjects to avoid legal risk at the end of the paper.