Boilerplate: The Foundation of Market Contracts

Cover......Page 1
Half-title......Page 3
Title......Page 5
Copyright......Page 6
Dedication......Page 7
Contents......Page 9
Preface Or: A Boilerplate Introduction......Page 11
List of Contributors......Page 17
Part i  Why is Boilerplate One-Sided?......Page 21
1 One-Sided Contracts in Competitive Consumer Markets......Page 23
I Explaining One-Sided Contracts......Page 24
II A Simple Model......Page 27
III Positive and Normative Implications......Page 29
IV Alternative Information-Based Explanations......Page 30
2 Cooperative Negotiations in the Shadow of Boilerplate......Page 32
I From Contracts of Adhesion to Market Assent......Page 33
A Hospital Bills......Page 34
B Consumer Credit Cards......Page 35
C Retail Sales Return Policies......Page 36
III Explaining Observed Behavior: Designing Standard-Form Terms that Are Meant to Be Forgiven......Page 37
A Discretionary Forgiveness as Ex-Post Customer Screening......Page 38
C Discretionary Benefits and the Potential Instability of Consumer Screening through Two-Part Standard-Form Contracts......Page 40
IV The Value of Discretion: Distributional Issues in the Regulation of Standard-Form Contracts and Their Renegotiation......Page 42
A The Complexity of Opportunism......Page 43
B Doctrinal Implications......Page 44
3 Boilerplate and Economic Power in Auto-Manufacturing Contracts......Page 49
I The Contracts......Page 50
II Drafting of Boilerplate......Page 55
Open-Ended Provisions......Page 57
III Economic Power......Page 58
Conclusion......Page 63
4 “Unfair” Dispute Resolution Clauses:
Much Ado about Nothing?......Page 65
A How Pervasive Are Choice of Law, Forum, and Arbitration Clauses?......Page 69
B Relationships among DRCs and Market, Product, Buyer, and Seller Characteristics......Page 71
A Are Choices of Law More Likely in Seller-Friendly States?......Page 76
B Do Sellers Actively Establish Relationships in Seller-Friendly States?......Page 81
C Choice of Forum......Page 83
Conclusion......Page 84
5 The Unconventional Uses of Transaction Costs......Page 86
A Screening Consumers Out......Page 87
B Price Discrimination......Page 88
C Hiding Benefits Granted to Selected Consumers......Page 90
A Making It Difficult to Compare among Rivals......Page 91
B How Can Beneficial Boilerplate Terms Harm Competition?......Page 92
IV A Credible Signal for Not Negotiating......Page 94
A Signaling Improved Incentives......Page 95
C Signaling Competitors about Uniformity of Terms......Page 96
A Price Discrimination......Page 97
B Using Beneficial Boilerplate Terms to Harm Competition......Page 98
Conclusion......Page 99
Part ii  Should Boilerplate Be Regulated?......Page 101
6 Online Boilerplate: Would Mandatory Web Site Disclosure of e-Standard Terms Backfire?......Page 103
A Do Consumers Read Their e-Standard Forms?......Page 105
B Can Market Pressure Discipline e-Businesses?......Page 106
II The Potential Benefits of Mandatory Web Site Disclosure......Page 107
A Will Mandatory Web Site Disclosure Alleviate Market Failures?......Page 109
B Legal Ramifications of Mandatory Web Site Disclosure When Consumers Do Not Read and Shop......Page 112
Conclusion......Page 113
7 Preapproved Boilerplate......Page 115
A Incentives for Creating Safe Harbors......Page 117
B Approved Contracts as Safe Harbors......Page 118
C Lock-In......Page 119
A The Capacity to Calculate......Page 120
B Vulnerability to Capture......Page 122
Conclusion......Page 125
8 “Contracting” for Credit......Page 126
A Context......Page 127
B Ramifications......Page 129
II Responding to Problems with Credit Card Agreements......Page 131
A Running in Place......Page 132
B Moving Forward......Page 133
Conclusion......Page 139
9 The Role of Nonprofits in the Production of Boilerplate......Page 140
C Other Nonprofits......Page 141
A Objectives......Page 142
B Perceptions......Page 145
C Costs of Production......Page 146
D Tax Treatment......Page 148
IV Legal Implications......Page 149
Conclusion......Page 150
10 The Boilerplate Puzzle......Page 151
I Advantage-Taking and Boilerplate......Page 153
II Collusion and Standardized Terms......Page 155
III Fine Print and Weak Paternalism......Page 156
IV Fine Print and Signal Dampening......Page 159
Conclusion......Page 161
Part iii  Interpretation of Boilerplate......Page 163
11 Contract as Statute......Page 165
A The Case of the Pari Passu Clause......Page 166
B International Swap and Derivatives Association......Page 168
A Traditional Contract Interpretation......Page 170
B Dealing with Court Errors......Page 175
III A Statutory Theory of Boilerplate Interpretation......Page 176
A The Designated Legislative Body......Page 177
B Interpretation......Page 178
C Other Industry-Wide Sources of Authority......Page 180
Conclusion......Page 181
12 Modularity in Contracts: Boilerplate and Information Flow......Page 183
I Modularity in Contract......Page 185
II Modular Boilerplate......Page 187
III An Information-Theoretic Model of Contract Boilerplate......Page 191
Conclusion......Page 194
13 Contra Proferentem: The Allure of Ambiguous Boilerplate......Page 196
I The Birth of Boilerplate......Page 197
II The Feedback Loop in Policy Drafting......Page 198
III Perverse Incentives......Page 199
B Drafters Will Write Only to Those Who Read......Page 200
C Ambiguity by Consensus and the Adverse Possession of Language......Page 201
Conclusion: Ending the Private Conversation......Page 204
Part iv Commentary......Page 207
I......Page 209
II......Page 212
III......Page 214
IV......Page 216
V......Page 218
15 The Law and Sociology of Boilerplate......Page 220
PREFACE......Page 231
ONE. ONE-SIDED CONTRACTS IN COMPETITIVE CONSUMER MARKETS......Page 232
TWO. COOPERATIVE NEGOTIATIONS IN THE SHADOW OF BOILERPLATE......Page 233
THREE. BOILERPLATE AND ECONOMIC POWER IN AUTO-MANUFACTURING CONTRACTS......Page 234
FOUR. “UNFAIR” DISPUTE RESOLUTION CLAUSES: MUCH ADO ABOUT NOTHING?......Page 235
FIVE. THE UNCONVENTIONAL USES OF TRANSACTION COSTS......Page 237
SIX. ONLINE BOILERPLATE: WOULD MANDATORY WEB SITE DISCLOSURE OF e-STANDARD TERMS BACKFIRE?......Page 239
SEVEN. PREAPPROVED BOILERPLATE......Page 243
EIGHT. “CONTRACTING” FOR CREDIT......Page 244
NINE. THE ROLE OF NONPROFITS IN THE PRODUCTION OF BOILERPLATE......Page 245
TEN. THE BOILERPLATE PUZZLE......Page 246
ELEVEN. CONTRACT AS STATUTE......Page 247
TWELVE. MODULARITY IN CONTRACTS: BOILERPLATE AND INFORMATION FLOW......Page 248
FOURTEEN. BOILERPLATE TODAY: THE RISE OF MODULARITY AND THE WANING OF CONSENT......Page 250
FIFTEEN. THE LAW AND SOCIOLOGY OF BOILERPLATE......Page 251
Index......Page 253