Contract as Statute

The traditional model of contract interpretation focuses on the “meeting of the minds.” Parties agree on how to structure their respective obligations and rights and then specify their agreement in a written document. Gaps and ambiguities are inevitable. But where contract language exists for the point in contention and a dispute arises as to the meaning of this language, courts attempt to divine what the parties intended. Among the justifications for deferring to the intent of the parties is the assumption that parties know what is best for themselves. Deference also arguably furthers autonomy values. Not all contracts and contract terms are individually negotiated. Standard- form or boilerplate contracts are common in the commercial world. Standard-form contracts have received considerable attention from commentators. The focus has been on the problem of power and informational asymmetries among the contracting parties. One party dictates the terms for example, a big consumer-goods producer may draft a standard-form contract that forms a mandatory part of all consumer purchases. Boilerplate contracts, however, are found in many markets where the relationship between the parties is not characterized by power imbalances. Instead, we find sophisticated parties on both sides and a multitude of parties with their slight variations on the same set of boilerplate terms. Large portions of the markets for bonds and derivatives are dominated by boilerplate of this type. Our goal is to suggest that the interpretation of boilerplate contracts among sophisticated parties is a topic in need of attention. We contend that general principles of contract interpretation should not apply to this important subset of commercial contracts and make the case that these contracts are better viewed as akin to statutes.