Monday, February 28, 2011
Christopher Drahozal (University of Kansas) and Peter Rutledge (University of Georgia) have posted Contract and Procedure to SSRN.
This paper examines both the theoretical underpinnings and empirical picture of procedural contracts. Procedural contracts may be understood as contracts in which parties regulate not merely their commercial relations but also the procedures by which disputes over those relations will be resolved. Those procedural contracts regulate not simply the forum in which disputes will be resolved (arbitration vs litigation) but also the applicable procedural framework (discovery, class action waivers, remedies limitations, etc.). At a theoretical level, this paper explores both the limits on parties' ability to regulate procedure by contract (at issue in the Supreme Court's recent Rent-A-Center decision) and the scope of an arbitrator's ability to fill gaps in parties' procedural contracts (at issue in the Supreme Court's recent Stolt-Nielsen decision). At an empirical level, this paper taps a largely unexplored database of credit card contracts available at the Federal Reserve in order to examine actual practices in the use of procedural contracts.