ABSTRACT
Modern contract theory often treats equity as a defect of contract doctrine because it supposedly undermines party intent. Discretionary, ex post scrutiny of contracts is said to frustrate ex-ante planning and reduce contractual value. Theorists point to the hyperformalist contracting practices of particular groups as models to which general contract law should conform. Inaccurate histories – claiming that equity once served a narrow function in contract that is now obsolete – support excising equity from contract law. This Article corrects the contemporary empirics and the history. It shows that equity has long functioned, and continues to function, as a core mechanism for giving effect to party intent under conditions of incomplete contracting, bounded rationality, informational asymmetry, and opportunism. Today, in a range of contexts, sophisticated parties choose equitable adjudication, authorizing decisionmakers to depart from strict legal rules in favor of commercial purpose and fairness. Historically, equity was not a marginal factor but the very root of modern contract law. Rather than undermining autonomy, equity operates as a cost-effective device for aligning legal enforcement with contractual purpose where rigid rules predictably fail. When properly calibrated and competently administered, equity supports rather than threatens party intent and contract value.
Blanchard, Sadie, Contracting for Equity (September 1, 2025).
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