Claire A. Hill


Latin American contract documentation used to be quite short, as is typical in civil law countries. Increasingly, it resembles U.S. contract documentation: long, detailed, and full of boilerplate. This commentary discusses this development, and considers what effect it will have on contracting practice in Latin America; it also considers some broader implications of international convergence in contracting practices.

I argue that the explanation can't be that U.S. contracting practices are superior. That explanation doesn't even work in the U.S., where parties and institutions are geared up to use U.S. practices and documentation. Indeed, most of the virtues of U.S.-style contracting are unavailable when one or both parties are Latin American. My alternative explanation principally relies on agency costs, path dependence, and an arms-race. Once one party presents a U.S.-style contract, the other party is hard pressed not to respond in kind; eventually, U.S.-style documentation becomes the norm.

And it's not just the documentation that may become the norm. The penumbra-constricting ethos, wherein a specific prohibition is deemed to permit anything "up to the line" may be imported along with the U.S.-style documentation. But, given increasing globalization, which brings with it increasing heterogeneity among contracting parties, the adoption of U.S.-style documentation outside the U.S. may be inevitable.

Included in

Law Commons