Contracts as Technology

Kevin E. Davis

New York University School of Law

April 1, 2013

New York University Law Review, Vol. 88: 83, No. 1, April 2013
NYU Law and Economics Research Paper No. 13-17

If technology means, “useful knowledge about how to produce things at low cost", then contracts should qualify. Just as mechanical technologies are embodied in blueprints, technologies of contracting are embodied in contractual documents that serve as, “blueprints for collaboration". This Article analyzes innovations in contractual documents using the same kind of framework that is used to analyze other kinds of technological innovation. The analysis begins by laying out an informal model of the demand for and supply of innovative contractual documents. The discussion of demand emphasizes the impact of innovations upon not only each party’s incentives to collaborate efficiently, but also upon reading costs and litigation costs. The analysis of supply considers both the generation and dissemination of innovations and emphasizes the importance of cumulative innovation, learning by-doing, economies of scale and scope, and trustworthiness.

Recent literature has raised concerns about the extent to which law firms produce contractual innovations. In fact, a wide range of actors other than law firms supply contractual documents; including end users of contracts, specialized providers of legal documents, legal database firms, trade associations, and academic institutions. This article discusses the incentives and capabilities of each of these potential sources of innovation. It concludes by discussing potential interventions such as: (1) enhancing intellectual property rights, (2) relaxing rules concerning the unauthorized practice of law and, (3) creating or expanding publicly sponsored clearinghouses for contracts.

Number of Pages in PDF File: 46

Keywords: contracts, innovation, boilerplate

JEL Classification: O31, K12

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Date posted: May 29, 2013 ; Last revised: July 11, 2013

Suggested Citation

Davis, Kevin E., Contracts as Technology (April 1, 2013). New York University Law Review, Vol. 88: 83, No. 1, April 2013; NYU Law and Economics Research Paper No. 13-17. Available at SSRN: https://ssrn.com/abstract=2267389

Contact Information

Kevin E. Davis (Contact Author)
New York University School of Law ( email )
40 Washington Square South
Vanderbilt Hall, Room 335
New York, NY 10012-1099
United States
212-992-8843 (Phone)

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