Center for Contract and Economic Organization
Program in the Law and Economics of Capital Markets
Sovereign loans involve complex but largely standardized contracts, and these include some terms that no one understands. Lawyers often account for the existence of these terms through origin myths. Focusing on one contract term, the pari passu clause, this article explores two puzzling aspects of these myths. First, it demonstrates that the myths are inaccurate as to both the clause’s origin and the role of lawyers in contract drafting. Second, the myths often are unflattering, inaccurately portraying lawyers as engaged in little more than rote copying. The article probes this disjunction between the myths and lawyers’ actual practices and explores why contracts origin myths might hold such appeal for this elite segment of the bar.
Mark C. Weidemaier, Robert E. Scott & G. Mitu Gulati,
Origin Myths, Contracts, and the Hunt for Pari Passu,
UNC Legal Studies Research Paper No. 1633439; 5th Annual Conference on Empirical Legal Studies Paper
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/1642