Contract law as an academic discipline is as uneasily stuck together as the 1L course itself. The two major strands of self-identifying contract scholars–loosely, those that unpack “negotiated” business deals and those that lament “adhesion” consumer contracts–rarely talk to or learn from one another. And the problem replicates in the scholarly fields that have sloughed off from the core over time, from antitrust to corporate law, and from private employment to consumer privacy. Cross-pollination between scholars working on similar problems of consent, but on different types of agreements, is lamentably rare.
There are many causes for the fragmentation, and resultant decline, of a discipline that once produced great public goods like the UCC and the Restatement (2nd) of Contracts. One is the sheer volume of scholarship that each individual subdiscipline creates, and thus the barriers to entry for those looking to engage with the state of the art. We here at JOTWELL seek to offer you a curated set of papers to read, but only a dozen or so out of hundreds, across contract types, won’t make you a truly informed scholar.
It’s therefore with real enthusiasm that I can recommend to you a top-notch literature review, on an incredibly important topic: what do we know about commercial boilerplate. Commercial Boilerplate: A Review and Research Agenda, written for the estimable Annual Review of Law and Social Science by authors who’ve produced much of the ground-breaking work on that topic in the last generation, is everything you could hope for in the genre. It is lucid, insightful, generative and short. You should read it.
The authors usefully start with an intellectual history of the field of commercial boilerplate. Unlike in consumer contract context, scholars came to business contracts assuming that terms were dickered and priced, and thus meaningful. As they point out, early Law and Economics scholars bought attention to an inconvenient fact: “sub-optimal terms seem to persist in contracts among sophisticated commercial parties.” (P. 5.) And the more scholars looked, the more confused they got. They “discovered provisions in the standard form that were not understood at all, were not priced, and seemed to spread and be highly sticky despite the lack of comprehension.” (P. 7.) Not only was boilerplate suboptimal, but it constantly mutated in seemingly random ways: it varied a bit between deals, lawyers and across time. This created opportunities that clever lawyers could exploit (and they have). But it left scholars puzzled, trying to understand what was happening in the background to produce these messy terms.
The authors describe successive intellectual efforts to explain the world, and then summarize state of the art today. As they say, modern scholars are increasingly focused on how contracts are produced, focusing on both on the production markets and their actors. “At one end of the spectrum is the thin, bilateral market where parties have the luxury of designing bespoke contracts that perfectly embody the terms that are designed to implement their joint goals.” (P. 16.) But most commercial contracts are not built in that world, but rather in thick markets, where “parties may prefer standardization and economies of scale even at the risk of an increase in design errors.” (P. 17.) As the authors show using case examples from the sovereign bond markets (where they have extensively researched) these thick markets produce contracts marked by a variety of persistent bugs, from “landmines” to “historic holdovers” to “subversive accretions” to “obsolescence.” That these errors occur in billion-dollar deals remains an important motivating puzzle for contract theory, with implications for the interpretation and adjudication of such deals that have not yet been fully worked out. They offer a research agenda for scholars interested in commercial contracts, but which could be as easily generative for those who study deals in other parts of the contracting universe.
I certainly don’t think one review essay can unite the many strands of contract scholarship. But celebrating the production, and increasing the consumption, of intelligent literature reviews is a promising way for contract scholars to better understand each others’ projects. Far from being beholden to static and unrealistic assumptions, legal economists and sociologists in the last generation have made enormous progress toward making commercial contract scholarship more realistic. Other scholars would do well to learn what they’ve been up to.
