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Full-Text Articles in Law

Investigating The Contract Production Process, Stephen J. Choi, Robert E. Scott, G. Mitu Gulati Jan 2021

Investigating The Contract Production Process, Stephen J. Choi, Robert E. Scott, G. Mitu Gulati

Faculty Scholarship

Contract law and theory have traditionally paid little attention to the processes by which contracts are made. Instead, contracts among sophisticated parties are assumed to be full articulations of the desires of the parties; whatever the process, the outcome is the same. This article compares sovereign debt contracts from US and UK firms, with different production processes, that are trying to do the same thing under very similar legal regimes. We find that that the production process likely matters quite a bit to the final form that contracts take.


Contractual Arbitrage, Stephen J. Choi, G. Mitu Gulati, Robert E. Scott Jan 2020

Contractual Arbitrage, Stephen J. Choi, G. Mitu Gulati, Robert E. Scott

Faculty Scholarship

Standard-form contracts are likely to be incomplete because they are not tailored to the needs of particular deals. In an attempt to reduce incompleteness, standard-form contracts often contain clauses with vague or ambiguous terms. Terms with indeterminate meaning present opportunities for strategic behavior well after a contract has been executed. This linguistic uncertainty in standard-form commercial contracts creates an opportunity for “contractual arbitrage”: parties may argue ex post that the uncertainties in expression mean something that the contracting parties did not contemplate ex ante. This chapter argues that the scope for contractual arbitrage is a direct function of the techniques …


Innovation Versus Encrustation: Agency Costs In Contract Reproduction, Stephen J. Choi, Mitu Gulati, Robert E. Scott Jan 2020

Innovation Versus Encrustation: Agency Costs In Contract Reproduction, Stephen J. Choi, Mitu Gulati, Robert E. Scott

Faculty Scholarship

This article studies the impact of exogenous legal change on whether and how lawyers across four different deal types revise their contracts’ governing law clauses in order to solve the problem that the legal change created. The governing law clause is present in practically every contract across a wide range of industries and, in particular, it appears in deals as disparate as private equity M&A transactions and sovereign bond issuances. Properly drafted, the clause increases the ex ante economic value of the contract to both parties by reducing uncertainty and litigation risk. We posit that different levels of agency costs …


The Role Of Groups In Norm Transformation: A Dramatic Sketch, In Three Parts, Robert B. Ahdieh Jun 2018

The Role Of Groups In Norm Transformation: A Dramatic Sketch, In Three Parts, Robert B. Ahdieh

Robert B. Ahdieh

Legal scholars, as well as economists, have focused limited attention on the role of coordinated groups of market participants - committees, clubs, associations, and the like - in social ordering generally and in the evolution of norms particularly. One might trace this neglect to some presumptive orientation to state actors (expressive law) and autonomous individuals (norm entrepreneurs) as the sole parties of interest in social change. Yet, alternative stories of social ordering and norm change might also be told. Dramatic recent changes in the contracting practices of the sovereign debt markets offer one such story.

Using the latter by way …


The Black Hole Problem In Commercial Boilerplate, Stephen J. Choi, G. Mitu Gulati, Robert E. Scott Jan 2017

The Black Hole Problem In Commercial Boilerplate, Stephen J. Choi, G. Mitu Gulati, Robert E. Scott

Faculty Scholarship

Rote use of a standard form contract term can erode its meaning, a phenomenon made worse when the process of encrustation introduces various formulations of the term. The foregoing process, when it occurs, weakens the communicative properties of boilerplate terms, leading some terms to lose much, if not all, meaning. In theory, if a clause is completely emptied of meaning through this process it can create a contractual “black hole.” The more frequent and thus potentially more pervasive problem arises when, as the term loses meaning, random variations in language appear and persist, resulting in what we term a “grey …


Variation In Boilerplate: Rational Design Or Random Mutation?, Stephen J. Choi, G. Mitu Gulati, Robert E. Scott Jan 2016

Variation In Boilerplate: Rational Design Or Random Mutation?, Stephen J. Choi, G. Mitu Gulati, Robert E. Scott

Faculty Scholarship

Standard contract doctrine presumes that sophisticated parties choose their terminology carefully because they want courts or counterparts to understand what they intended. The implication of this “Rational Design” model of rational behavior is that courts should pay careful attention to the precise phrasing of contracts. Using a study of the sovereign bond market, we examine the Rational Design model as applied to standard-form contracting. In NML v. Argentina, federal courts in New York attached importance to the precise phrasing of the boilerplate contracts at issue. The industry promptly condemned the decision for a supposedly erroneous interpretation of a variant of …


Asking The Nearest Hippie, Shubha Ghosh Oct 2015

Asking The Nearest Hippie, Shubha Ghosh

Michigan Telecommunications & Technology Law Review

It is an honor to be asked to contribute to this Symposium in honor of Margaret Jane Radin. It is particularly exciting to be able to engage with her scholarship during the summer of 2015 (the time this essay was written) when so many compelling legal issues are coming to a head: same sex marriage and the recognition of dignity as a constitutional value, pragmatic treatment of controversial regulation such as the Affordable Care Act, the death penalty under scrutiny as two justices unequivocally reaffirm its unconstitutionality, voting rights protections roll back, police brutality against African-American citizens as a daily …


Boilerplate And Economic Power In Auto Manufacturing Contracts, Omri Ben-Shahar, James J. White Jan 2006

Boilerplate And Economic Power In Auto Manufacturing Contracts, Omri Ben-Shahar, James J. White

Articles

This Article is structured as follows. Part I compares the terms and conditions in the purchase orders of the Original Equipment Manufacturers (OEMs) and highlights important differences in the substance of these boilerplate provisions. It argues that these differences cannot be easily reconciled with the prediction that sophisticated parties draft the most efficient boilerplate terms. Part II examines how these forms are drafted, how their terms are negotiated, and how the OEMs guard their terms from erosion. It provides some insight on how tailoring occurs and how the internal organization of a party to a deal affects the terms that …


"Contracting" For Credit, Ronald J. Mann Jan 2006

"Contracting" For Credit, Ronald J. Mann

Faculty Scholarship

On a recent day, I used my credit cards in connection with a number of minor transactions. I made eight purchases, and I paid two credit card bills. I also discarded (without opening) three solicitations for new cards, balance transfer programs, or other similar offers to extend credit via a credit card. Statistics suggest that I am not atypical. U.S. consumers last year used credit cards in about 100 purchasing transactions per capita, with an average value of about $70. At the end of the year, Americans owed nearly $500 billion dollars, in the range of $1,800 for every man, …


The Role Of Groups In Norm Transformation: A Dramatic Sketch, In Three Parts, Robert B. Ahdieh Jul 2005

The Role Of Groups In Norm Transformation: A Dramatic Sketch, In Three Parts, Robert B. Ahdieh

Faculty Scholarship

Legal scholars, as well as economists, have focused limited attention on the role of coordinated groups of market participants - committees, clubs, associations, and the like - in social ordering generally and in the evolution of norms particularly. One might trace this neglect to some presumptive orientation to state actors (expressive law) and autonomous individuals (norm entrepreneurs) as the sole parties of interest in social change. Yet, alternative stories of social ordering and norm change might also be told. Dramatic recent changes in the contracting practices of the sovereign debt markets offer one such story.

Using the latter by way …


Exploring The Battle Of The Forms In Action, Daniel Keating Jan 2000

Exploring The Battle Of The Forms In Action, Daniel Keating

Michigan Law Review

Like many commercial law professors, I have long been fascinated with the workings of the Uniform Commercial Code's section 2-207, the "battle of the forms" provision. There are two features of that section, one internal and one external, that make it such an intriguing statute to ponder. The internal source of fascination with section 2-207 is that it provides a classic model for teaching students about the intricacies of statutory construction. There is probably no other provision within U.C.C. Article 2 that provides more confusion to law students and more challenge to the instructor than does section 2-207. There is …