Contract Production in M&A Markets

Authors

Stephen J. Choi, New York University School of LawFollow
Mitu Gulati, University of Virginia School of LawFollow
Matthew Jennejohn, Brigham Young University Law SchoolFollow
Robert E. Scott, Columbia Law SchoolFollow

Document Type

Article

Publication Date

2023

Abstract

Contract scholarship has devoted considerable attention to how contract terms are designed to incentivize parties to fulfill their obligations. Less attention has been paid to the production of contracts and the tradeoffs between using boilerplate terms and designing bespoke provisions. In thick markets everyone uses the standard form despite the known drawbacks of boilerplate. But in thinner markets, such as the private deal M&A world, parties trade off costs and benefits of using standard provisions and customizing clauses. This Article reports on a case study of contract production in the M&A markets. We find evidence of an informal information network that transforms bespoke changes in contract terms into industry-wide standard provisions. This organic coordination structure leads to both market-wide coordination as well as a diversity in this response as individual actors implement bespoke variations of the new standard.

Disciplines

Business Organizations Law | Contracts | Law | Securities Law

Comments

Copyright © 2023 Penn Law: Legal Scholarship Repository.

Recommended Citation

Stephen J. Choi, Mitu Gulati, Matthew Jennejohn & Robert E. Scott, Contract Production in M&A Markets, 171 U. Pa. L. Rev. 1881 (2023).
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/4411