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Sunday, November 20, 2005

Ahdieh on Boilerplate

AhdiehRecently posted on SSRN is a working paper by Robert Ahdieh titled The Strategy of Boilerplate.  Here's the abstract:

Boilerplate is everywhere. Its use in contracts among unsophisticated parties - and in standard-form contracts between dominant repeat-players and their inexperienced and uncounseled customers - may not be surprising. Yet boilerplate is also pervasive in contracts among sophisticated and recurrent contracting parties, ably represented by well-compensated counsel. While various explanations have been offered for this phenomenon - including transaction cost and network effect theories - the incompleteness of each approach invites further attention to the sources of standardization in contracting. Here, I offer a 'strategic' conception of boilerplate in facilitating communication among sophisticated parties.

Contrary to our common emphasis on the element of conflict in bargaining, its essential feature is a dynamic of coordination. Given the resulting mixed-motive game, direct communication may not be the primary means of communication in bargaining. Both the use of boilerplate and deviations from it, by contrast, may speak worlds. Perhaps most significantly, for all the sense of 'boilerplate' as somehow passive or inert, it may - in appropriate circumstances - constitute an effective weapon in bargaining parties' efforts to advance their contracting interests.

Click here to download the paper.

[Bill Sjostrom]

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