Private Law Theory

ABSTRACT
This paper considers how the theory of contractual black holes – as developed by Stephen J Choi, Mitu Gulati, and Robert E Scott – might apply to boilerplate contract terms from third-party boilerplate providers. Third-party boilerplate providers, such as trade associations and form sellers, are more likely to be not-for-profit entities and provide industry-standard or specialized boilerplate than private law firms (which were responsible for drafting sovereign bond contracts with pari passu clauses, described by Choi, Gulati, and Scott as the paradigmatic case of a contractual black hole—a contract provision that has become ’emptied of any recoverable meaning’). Each of these differences in characteristics would seem to make it less likely that a contractual black hole will form and more likely that the third-party provider would revise the boilerplate in response to an erroneous court decision. The paper then examines two types of arbitration boilerplate – scope provisions and competence-competence clauses – which are produced by both arbitration institutions (a type of third-party boilerplate provider) and law firms to evaluate the extent to which they give rise to the ‘black hole problem’.

Drahozal, Christopher R, Third-Party Boilerplate Providers and Contractual Black Holes (November 17, 2023).