Standardized Enforcement: Access to Justice vs. Legal Innovation

40 Pages Posted: 31 Aug 2010

See all articles by Nicola Gennaioli

Nicola Gennaioli

Bocconi University - Department of Finance; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research

Enrico C. Perotti

University of Amsterdam - Finance Group; Centre for Economic Policy Research (CEPR)

Date Written: April 1, 2009

Abstract

The use of standard contracts is usually explained by generic transaction costs. In a model where more resourceful parties can distort enforcement, we show that standard contracts reduce enforcement distortions by simplifying judicial interpretation of preset terms, training judges on a subset of admissible evidence. In this setup, the introduction of a standard contract statically expands the volume of trade but it hampers legal and contractual innovation by crowding out the use of non-standard contracts. We rationalize the large scale standardization effort (by commercial codification and private standards) that occurred in Civil and Common Law systems in the XIX century during a period of booming commerce and long distance trade.

Keywords: contract, standardization, access to justice, legal innovation

JEL Classification: K12, K41

Suggested Citation

Gennaioli, Nicola and Perotti, Enrico C., Standardized Enforcement: Access to Justice vs. Legal Innovation (April 1, 2009). Amsterdam Center for Law & Economics Working Paper No. 2010-05, Available at SSRN: https://ssrn.com/abstract=1668464 or http://dx.doi.org/10.2139/ssrn.1668464

Nicola Gennaioli (Contact Author)

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

Enrico C. Perotti

University of Amsterdam - Finance Group ( email )

Plantage Muidergracht 12
Amsterdam, 1018 TV
Netherlands
+31 20 525 4159 (Phone)
+31 20 525 5285 (Fax)

HOME PAGE: http://www.fee.uva.nl/fm/people/pero.htm

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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