Revising Boilerplate: A Comparison of Private and Public Company Transactions

Authors

Stephen J. Choi, New York University School of LawFollow
Robert E. Scott, Columbia Law SchoolFollow
G. Mitu Gulati, Duke University School of LawFollow

Document Type

Article

Publication Date

2020

Abstract

The textbook model of commercial contracts between sophisticated parties holds that terms are proposed, negotiated and ultimately priced by the parties. Parties reach agreement on contract provisions that best suit their transaction with the goal of maximizing the joint surplus from the contract. The reality, of course, is that the majority of the provisions in contemporary commercial contracts are boilerplate terms derived from prior transactions and even the most sophisticated contracting parties pay little attention to these standard terms, focusing instead on the price of the transaction. With standard-form or boilerplate contracts, this dynamic of replicating by rote the terms from prior transactions is exacerbated when the contract terms are reproduced largely because the same term was successful in closing prior deals and, even more importantly, because the terms are part of the market standard. The end result is that suboptimal Here, courts may be practically incapable of recovering a plausible meaning that was attached to the standard terms by the contracting parties at the time the contract was drafted.

Disciplines

Banking and Finance Law | Business Organizations Law | Contracts | Law | Law and Economics | Legal Profession | Securities Law

Comments

Copyright 2020 by The Board of Regents of the University of Wisconsin System; Reprinted by permission of the Wisconsin Law Review.

Recommended Citation

Stephen J. Choi, Robert E. Scott & G. Mitu Gulati, Revising Boilerplate: A Comparison of Private and Public Company Transactions, 2020 Wis. L. Rev. 629 (2020).
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/2577