There is an enormous literature on rules and standards as forms of legal commands. Most of this literature focuses on rules and standards in public laws such as statutes, regulations, and judicial opinions. Less attention is given to the rules/standards choice in private legal drafting, such as in contracts, wills, or patents.
Considering the rules/standards choice in private drafting raises novel issues that the literature has not adequately examined. Unlike legislatures and agencies that are supposed to act in the public interest, private drafters are motivated by their own self-interest. The rules/standards choice in private legal drafting therefore depends not only on well-known public policy considerations such as a balance between the certainty of rules and the flexibility of standards, but also on a drafter’s private self-interested incentives.
This Article presents a model of these incentives and how they affect the rules/standards choice. Under the model, whether a rule or standard will be written depends on a delicate balance between the self-serving incentives of private drafters and the anticipated resistance of courts. Private drafters benefit from rules that can be slanted in their own favor but are constrained by the higher costs of rule drafting and the likelihood of judicial resistance to slanted rules. On the other side, courts prefer setting aside slanted rules in favor of standards that allow them greater discretion to reach the just outcome but are constrained by the higher adjudication costs of standards, and therefore must tolerate and enforce some slanted rules. Understanding this balance provides insight into drafting choices and interpretative debates regarding contracts, patents, and other private legal instruments.
Keywords: rules, standards, rules v. standards, public law, private law, private legal directives, patents, contracts, wills, private drafters
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