Private Rules and Standards


There is an enormous literature on the question of whether legal directives should take the form of rules or standards. This literature generally focuses on public laws such as statutes and regulations. Private legal instruments such as patents, contracts, and wills are given little thought. This Article analyzes the choice in the private law context.

Beyond making the obvious-yet-overlooked point that the rules/standards choice applies to private laws, the Article makes two contributions. First, it explores the normative arguments for rules and standards when applied to privately made laws, which are sometimes similar to, and other times different from, the arguments given in the context of public laws. For example, in the public law context, an argument in favor of rules is that they provide notice of expected behavior, while an argument in favor of standards is that they allow tailoring to individual circumstances. Neither argument works when applied to a negotiated private contract: the parties do not need to be notified about what is in their own contract, and the negotiated contract is tailored to the parties’ circumstances.

Second, the Article asks a positive question: will drafters actually choose a rule or standard, given the drafter’s private incentives? This question is rarely asked with respect to public laws, because drafters such as legislators are implicitly assumed to be pursuing the public interest. Private drafters are unlikely to be so public-spirited. The Article provides 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.