Document Type

Article

Publication Date

2006

Abstract

It was once perceived, and still is commonly taught, that default rules in contract law must mimic efficient arrangements. Otherwise, these rules impose needless transaction costs upon parties who seek to opt out of them to reach more efficient positions. In settings where these costs are high, parties might find themselves "stuck" in a default, unable to reach the outcome that they prefer. The strong version of this account-that the only factor that can make an inefficient default rule stick is the direct cost of drafting a tailored provision-has been gradually reappraised. It is by now recognized that factors beyond drafting costs might also cause parties to stick with an undesirable default rule; that is, parties might choose not to opt out of a legal default even when a better provision can easily be identified and articulated at a negligible drafting cost. While this "stickiness" of defaults has been identified before in discrete contexts, the purpose of this Article is to suggest that its pervasiveness may be even broader than previous accounts have predicted.


Share

COinS