Contractual Landmines

88 Pages Posted: 5 Aug 2022 Last revised: 8 May 2023

See all articles by Robert E. Scott

Robert E. Scott

Columbia University - Law School

Stephen J. Choi

New York University School of Law

Mitu Gulati

University of Virginia School of Law

Date Written: May 7, 2023


The conventional view is that standardized boilerplate terms represent an optimal contractual solution to the contracting problems facing parties in large markets. As Smith and Warner explained, "harmful heuristics, like harmful mutations, will die out." But an examination of a sample of current sovereign bond contracts reveals numerous instances of harmful landmines--vague and apparently purposeful changes to standard language that increases a creditor's nonpayment risk, coupled with blatant errors in expression and drafting and a continuing use of inapt terms that were historically imported from corporate transactions. Moreover, these landmines differ from each other in important respects: purposeful changes to the standard form reflect careful lawyering on behalf of sovereign clients, while errors that only benefit subsequent activists reflect haste in adapting precedents to new transactions. Using both quantitative data and interviews with market participants, we find that the conventional view fails to recognize the unique role that lawyers play in the drafting of standard form contracts. Systematic asymmetries in the market for the lawyers who negotiate and draft these contracts appear to explain why real world contracts depart from the efficient contract paradigm.

Keywords: Landmines, Boilerplate, Contract, Sovereign Debt

JEL Classification: K12

Suggested Citation

Scott, Robert E. and Choi, Stephen J. and Gulati, Mitu, Contractual Landmines (May 7, 2023). Virginia Public Law and Legal Theory Research Paper No. 2022-56, Virginia Law and Economics Research Paper No. 2022-17, NYU Law and Economics Research Paper No. 23-02, NYU School of Law, Public Law Research Paper No. 23-02, Yale Journal of Regulation (forthcoming), Available at SSRN: or

Robert E. Scott

Columbia University - Law School ( email )

435 West 116th Street
New York, NY 10025
United States
212-854-0072 (Phone)

Stephen J. Choi

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

Mitu Gulati (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

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