Claire A. Hill


Complex contracts, such as those governing loans and acquisitions, create a state of the world-parties entering into a contract thereby become bound. The contract expressly summons up legal consequences for every promise it contains. But the relationship between the promises and the law's force is attenuated. Very often contract provisions set the stage rather than provide the script: accommodation seems more the rule than the exception. Indeed, for most contracting parties, the law's specter is one of many reasons to do what they promised to do, and often, not the most important reason. Parties also feel constrained by reputational and other extralegal forces within the complex contracting community. Moreover, the process of contracting itself can serve to elicit information and compliance. The combination of legal and extralegal forces permits parties to craft a constrained, yet flexible, relationship—probably the best the parties can do given the limits of language, knowledge and imagination.

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