Private Rules and Standards

Abstract

There is an enormous literature on the choice between rules and standards. This literature typically focuses on public laws such as statutes, regulations, and judicial opinions. This Article seeks to examine the rules/standards choice in a different context: private legal directives such as contracts, wills and patents.

Besides making the basic point that private laws also involve a rules/standards choice, the Article makes two contributions. First, it explores the normative arguments for rules and standards when applied to private laws, which are sometimes similar to, and at other times different from, the well-known arguments made in the context of public laws. Second, the Article asks a positive question: will private drafters actually choose a rule or standard, given the drafter’s private incentives? The Article answers by providing a model of how clashing incentives between private drafters (who pursue self-interested goals) and courts (who resist those goals) shapes the rules/standards choice. It then explains how this model helps explain drafting choices and interpretative doctrine with respect to contracts, wills, and patents.

Keywords: rules, standards, rules v. standards, public law, private law, private legal directives, patents, contracts, wills, private drafters

JEL Classification: K1, K10, K12, K2, K20