Option theory is beginning to generate robust insights in the legal literature, and it is particularly well-suited to contract law. This Article develops an embedded options theory of indefinite contracts, focusing on the proper scope of the indefiniteness doctrine—a core principle of contract law invalidating contracts that are too vague. This approach offers answers to two puzzling questions. First, why do parties write deliberately vague contracts, especially when they can contract with precise, verifiable metrics at a low cost? Second, what should a court do when confronted with an indefinite contract? Should it throw out the entire contract, impose a popular term, or do something else? This Article shows how the use of indefinite terms plus active judicial gap filling can create an embedded option—the valuable opportunity to take action in the future based on outcomes that are uncertain today. It then argues that these embedded options can be problematic from an economic point of view because they are unlikely to be fully appreciated by both parties to the contract. This means that embedded interpretive options will sometimes distort efficient trade and investment decisions. In short, there are underexplored costs to contractual gap filling. Ultimately, courts should resist the temptation to instinctively plug gaps and recognize that the indefiniteness doctrine has a meaningful role to play in contract law.
News & Events
-
Volume 97 Lead Piece Profiled in New York Times
The Volume 97 Lead Piece, a study of how the Supreme Court treats business interests by distinguished legal scholars Lee Epstein, William M. Landes, and Richard A. Posner, was profiled in the May 5, 2013 edition of the New York Times. The story, titled Corporations Find a Friend in the Supreme Court, [...]
-
Volume 98 Spring Submissions Closed
The Minnesota Law Review has closed the spring submissions period for Volume 98. Submissions for Volume 98 will reopen on Thursday, August 1. Please see the submissions page for more details.
-
Volume 98 Submissions Will Open Feb. 15
The Minnesota Law Review will begin accepting submissions for Volume 98 on Friday, February 15, 2013. Please see this page for more details.
-
Minnesota Law Review Announces Volume 98 Editorial Board
The Minnesota Law Review is pleased to announce its Volume 98 editorial board, headed by Editor in Chief Jake Vandelist.
-
Minnesota Law Review Announces 2013 Symposium Topic
The Minnesota Law Review is pleased to announce that its 2013 symposium will address the legal and political issues facing organized labor in the United States. The symposium will be held at the University of Minnesota Law School on October 25, 2013.
Recent Issues
- Volume 97 – No. 5
- Volume 97 – No. 4
- Volume 97 – No. 3
- Volume 97 – No. 2
- Volume 97 – No. 1
- Volume 96 – No. 6
- Volume 96 – No. 5
- Volume 96 – No. 4
- Volume 96 – No. 3
- Volume 96 – No. 2
- Volume 96 – No. 1
- Volume 95 – No. 6
- Volume 95 – No. 5
- Volume 95 – No. 4
- Volume 95 – No. 3
- Volume 95 – No. 2
- Volume 95 – No. 1
- Volume 94 – No. 6
- Volume 94 – No. 5
- Volume 94 – No. 4
- Volume 94 – No. 3
- Volume 94 – No. 2
- Volume 94 – No. 1
- Volume 93 – No. 6
- Volume 93 – No. 5
- Volume 93 – No. 4
- Volume 93 – No. 3
- Volume 93 – No. 2
- Volume 93 – No. 1
- Volume 92 – No. 6
- Volume 92 – No. 5
- Volume 92 – No. 4
- Volume 92 – No. 3
- Volume 92 – No. 2
- Volume 92 – No. 1
- Volume 91 – No. 6
- Volume 91 – No. 5
- Volume 91 – No. 4
- Volume 91 – No. 3
- Volume 91 – No. 2
- Volume 91 – No. 1
- Volume 90 – No. 6
- Volume 90 – No. 5
- Volume 90 – No. 4
- Volume 90 – No. 3
- Volume 90 – No. 2
- Volume 90 – No. 1