PARALLEL CONTRACT Clause Samples

PARALLEL CONTRACT. Aditi Bagchi1 This Article identifies a pervasive model of contracting that is inadequately treated in existing law and theory. In parallel contract, one party enters into a series of contracts with many similarly situated individuals on background terms that are presumptively identical. In these settings, the transaction costs associated with negotiating or even unilaterally tailoring terms to individuals exceed the benefit from such tailoring. Instead, the repeat party sets uniform background terms based on facts pertaining to its contracting partners as a group, including the mean and distribution of their preferences. Parallel contracts depart from the classical model of contract in two fundamental ways. First, obligations are not robustly dyadic in that they are neither tailored to the two parties to a given agreement nor understood by those parties by way of communications with each other. Second, obligations are not fixed at a discrete moment of contract. Parallel contracts should be interpreted differently than agreements more consistent with the classic model; in particular, the obligations of the repeat party should be understood by reference to its most recent practices and communications with any of the other parties in a given setting. All contracts are incomplete and most contracts are not fully negotiated.2 Few terms are negotiated at all.3 Parties to contract often are only dimly aware of what they are agreeing to when they enter contract.4 They come to understand the content of an agreement by way of communications received after contract, and with individuals who are not party to the 1 Associate Professor, Fordham University Law School. Many thanks to ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, and ▇▇▇ ▇▇▇▇▇▇▇▇ for comments and suggestions. I am also grateful for feedback received at the American Association of Law Schools Annual Meeting (Section on Contracts), Regulating for Decent Work conference at the International Labor Organization, and workshops at the Georgetown Law Center, UCLA Law School, the University of Pennsylvania Law School and ▇▇▇▇▇▇▇ & Mary Law School.

PARALLEL CONTRACT. Parallel contract incorporates two key (if only implicit) insights of contracts of adhesion and relational contract, respectively. First, contracts need not be robustly dyadic; communications of either party with third parties is important to their respective understanding of their agreement. Second, contractual obligations are not conclusively settled at a single moment of contract. Agreements are not just incomplete in the technical sense that terms were not drafted to address all possible contingencies.85 They are also obligationally incomplete in that obligations under an agreement are not settled at the moment of its inception– not simply ill-defined, but indeterminate. Casting doubt on the robust dyadic structure of contract should not be construed as a challenge to the bilateralism of contract law, which is characteristic of private law more generally.86 Private law theorists of all stripes have emphasized, in contrast to economic approaches to private law, that the distinguishing feature of private law is that individuals are empowered to bring claims against particular other individuals, and courts self-consciously adjudicate those claims based on reasons that pertain to the rights and obligations of the parties to each other. Contract law does not openly resolve disputes with direct reference to the effect of litigation outcomes on actors other than the litigants in a given dispute. However, the bilateralism of contract law, like that of private law generally, does not imply that the content of rights and duties of parties to one another are not informed by others, including their past and future conduct and their values. No viable theory of private law conceives of the rights and obligations of parties to one another entirely divorced from social context. Almost every theory will take into account, for example, whether conduct is reasonable in light of prevailing practices, or whether a legal rule is likely to make such conduct (by others) more or less frequent going forward. These considerations are usual in the tort context, even among those committed to theorizing the institution of tort in a way that is consistent with the internal perspective of tort as essentially bilateral. Contract law is bilateral in the sense that is characteristic of private law broadly. What I challenge here is the notion that the content of rights and obligations between contracting parties is set by reference solely to the acts and words of those parties in relatio...

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