Chapter 6 and Default Rules

Abstract:     
Because the ALI Domestic Partnership rules don't seem to meet the criteria for default rules, we might be tempted to think of them instead as a set of penalty default rules, designed to insure that the parties would contract around them, or at least that they would reveal privately held information? This theoretical possibility was suggested in the commercial context by Professors Ian Ayres and Robert Gertner. Thus setting a default quantity at zero, as the UCC does, forces the parties to specify some other quantity. Similarly, setting the availability of consequential damages at zero forces the party for whom they matter to contract for their recovery (probably at a higher contract price). After reviewing the arguments against using Chapter 6 rules as a default rule in the typical sense, I'd like to discuss why even a penalty default explanation is not likely to work as a practical matter.

Further, it appears that to the extent that Chapter 6 was designed to give some relief to same-sex couples (certainly one of its goals), it may have the unintended consequence of moving states toward same-sex marriage. Were a state to desire such a change, they seemingly could do so directly by amending their statutes rather than dragging along the far larger number of cohabiting couples.

Keywords: default rules, cohabitation, contracts, same-sex marriage, domestic partnerships

JEL Classifications: J12, K12, K30

Working Paper Series