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Friday, August 11, 2006

Bridgeman on Default Rules

Curtis_bridgeman_2 Metaphors are important in law.  Take the issue of what rules apply to a transaction when the parties have not specified them.  In the old days, we tended to think of these as "background" rules, a metaphor that suggested there was a kind of neutral backdrop, largely unchanging, covering generally acceptable and unquestioned sorts of things.  But with the advent of the personal computer came the metaphor of the "default" rule.  A default is something deliberately chosen for some reason -- the very concept implies that someone is selecting a particular setting from a menu of choices.  With the concept of "default" rules, the background moves into the foreground.

Hence the growing literature over default rules, the subject of a recent symposium at Florida State.  FSU's Curtis Bridgeman weighs in with his take in Default Rules, Penalty Default Rules, and New Formalism.  Here's the abstract:

This essay is a contribution to a symposium on default rules held at Florida State University College of Law.  In this symposium, Eric Posner makes a compelling argument that there are no penalty default rules in contract law, a claim that no doubt comes as a surprise to many contracts scholars. In passing, he cites Bob Scott and Alan Schwartz, who argue that there are few or no default rules in contract law, and who call for a return to formalism. Although Posner’s logic is at one level iron-clad -- if there are no default rules, then there are no penalty default rules -- I argue that he is mistaken to cite new formalists like Scott and Schwartz as fellow travelers.  This is not a central point of Posner’s, and therefore my essay is not meant as a critique of his main arguments.  Instead, I use this part of his discussion as an occasion to examine recent calls for a return to formalism in contract law.  In particular, I focus on two distinctions Posner makes: first, between default rules and legal formalities, and second, between default rules and rules of interpretation. I argue that Scott and Schwartz are implicitly committed to collapsing both of these distinctions, and in fact offer a formalistic vision of default rules of interpretation, a vision that is, ironically, more in the spirit of a penalty default.  Along the way, I briefly compare their view to classical formalism, and to Lon Fuller’s famous article on legal formalities.  My hope is that this discussion will set the stage for a more thorough assessment of new formalism in contract law, an assessment that is, unfortunately, beyond the scope of this essay.

[Frank Snyder]

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