Regulating opt-out: An economic theory of altering rules

Yale Law Journal

Volumn 121, Issue 8, 2012, Pages 2032-2116

  Ayres, Ian ^a  

^a LOYOLA UNIVERSITY CHICAGO   (United States)

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EID: 84861862408     PISSN: 00440094     EISSN: None     Source Type: Journal    
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References (317)

1. Ian Ayres, Empire or Residue: Competing Visions of the Contractual Canon, 26 Fla. St. U. L. Rev. 897, 901 (1999).
2. I can still remember in 1988 attending an important conference at Columbia that focused solely on when and whether corporate rules should be contractible.
3. Lucian Arye Bebchuk, Foreword: The Debate on Contractual Freedom in Corporate Law, 89 Colum. L. Rev. 1395 (1989).
4. Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87 (1989) [hereinafter Ayres & Gertner, Filling Gaps].
5. Ian Ayres & Robert Gertner, Majoritarian vs. Minoritarian Defaults, 51 Stan. L. Rev. 1591 (1999) [hereinafter Ayres & Gertner, Majoritarian].
6. Ian Ayres & Robert Gertner, Strategic Contractual Inefficiency and the Optimal Choice of Legal Rules, 101 Yale L.J. 729 (1992) [hereinafter Ayres & Gertner, Strategic Contractual Inefficiency].
7. see also Randy E. Barnett, The Sound of Silence: Default Rules and Contractual Consent, 78 Va. L. Rev. 821 (1992) (discussing the interaction between consent and default contractual rules).
8. Lucian Arye Bebchuk & Steven Shavell, Information and the Scope of Liability for Breach of Contract: The Rule of Hadley v. Baxendale, 7 J.L. Econ. & Org. 284 (1991) (analyzing consequences of limiting damages to losses that were foreseeable at the time of contracting).
9. David Charny, Hypothetical Bargains: The Normative Structure of Contract Interpretation, 89 Mich. L. Rev. 1815 (1991) (proposing a method and justification for engaging in hypothetical bargain analysis).
10. Charles J. Goetz & Robert E. Scott, The Limits of Expanded Choice: An Analysis of the Interactions Between Express and Implied Contract Terms, 73 Calif. L. Rev. 261 (1985) (proposing an error-reduction theory of implied contract terms).
11. Alan Schwartz, The New Textualism and the Rule of Law Subtext in the Supreme Court's Bankruptcy Jurisprudence, 45 N.Y.L. Sch. L. Rev. 149 (2001) (criticizing the Court's use of "new textualism" in the bankruptcy context).
12. See Ian Ayres, Ya-HUH: There Are and Should Be Penalty Defaults, 33 Fla. St. U. L. Rev. 589, 600-11 (2006) (discussing dozens of applications of information-forcing default setting in academic analysis and in the law itself). A recent Westlaw search of the Journals and Law Reviews database for "penalty default" or "information forcing default" returned 747 results.
13. Both defaults and altering rules can at times answer all of the "who, what, where, when, why, and how" questions. Thus, default rules might establish when and where delivery is due.
14. what is to be delivered.
15. who is to perform a duty.
16. and even how the duty is to be performed. The altering rules governing how default consequences are displaced also might speak to the six ur-question types. For example, contracting around certain corporate defaults might or might not require shareholder approval (who) or might require that specific language (what) is used.
17. opting for non-default treatment might be effective only after a cooling-off period (when) for door-to-door contracts.
18. or opt-out might be effective only if the contract recites sufficient reasons (why) for the alternative provision, Subsection II.F.2. For these reasons, answering the "how" question to understand the legally effective means of contracting around a default can touch upon the five W's as well.
19. See Alan Schwartz, Karl Llewellyn and the Origins of Contract Theory, in The Jurisprudential Foundations of Corporate and Commercial Law 12, 28 (Jody S. Kraus & Steven D. Walt eds., 2000).
20. See, e.g., John H. Langbein, The Nonprobate Revolution and the Future of the Law of Succession, 97 Harv. L. Rev. 1108, 1134 (1984). I still remember being asked by Stan Henderson to remove the term "default rule" from my first presentation to the Association of American Law Schools on the subject, because he felt that the phrase would be confusing to the contract section members. Even the terminology for the concept of a "mandatory" (i.e., non-displaceable) rule had not been settled. In our original article, Gertner and I favored the term "immutable" to describe rules that could not be privately reordered, but common usage has embraced the term "mandatory. " A Westlaw search of the JLR database found 534 results for the term "immutable rule" but 3914 results using the term "mandatory rule. "
21. Bill Eskridge almost convinced me to use the term "displacing" rule (instead of "altering" rule), because these types of rules displace the default treatment. But the term "altering rule" already has been used by a number of scholars, responding to brief earlier mentions of the term in my scholarship. A Westlaw search for ("altering rule" & ayres) in the JLR database found 19 articles. See, e.g., Benjamin I. Sachs, Enabling Employee Choice: A Structural Approach to the Rules of Union Organizing, 123 Harv. L. Rev. 655 (2010) (applying altering rule theory to an employee's transition from the nonunion default to union membership).
22. The default rule governing residential telephone land-line numbers is that telemarketers are free to call. The conditions that households use to (displace the default and) "opt in" to the do-not-call status represent the altering rules.
23. U.C.C. § 2-316(2) (2003). U.C.C. § 2-316(3), however, provides another mechanism for excluding the warranty of merchantability (for example, by saying that the product is offered "with all faults")-thus rendering the warranty of merchantability to be a non-necessary altering rule.
24. § 2-316(2).
25. One could imagine that either necessary or sufficient conditions could be formulated as rules or standards.
26. See generally Ian Ayres, Preliminary Thoughts on Optimal Tailoring of Contractual Rules, 3 S. Cal. Interdisc. L.J. 1 (1993) (arguing that the optimal level of tailoring of default rules depends on their contractibility).
27. Louis Kaplow, Rules Versus Standards: An Economic Analysis, 42 Duke L.J. 557 (1992) (analyzing the economic efficiency of legal rules as opposed to standards).
28. Baird Co. v. Gimbel Bros., 64 F.2d 344, 346 (2d Cir. 1933).
29. Drennan v. Star Paving Co., 333 P.2d 757 (Cal. 1958). Both Baird and Drennan involved the question of whether subcontractors could revoke an offer upon which a general contractor had relied. Judge Hand in Baird found a subcontractor's bid to be revocable, while Justice Traynor in Drennan found a subcontractor's bid to be irrevocable. But both opinions made clear that the parties might have expressly contracted for an alternative result. Baird, 64 F.2d at 345-46 ("While it is true that the plaintiff might in advance have secured a contract conditional upon the success of its bid, this was not what the defendant suggested.... The contractors had a ready escape from their difficulty by insisting upon a contract before they used the figures.
30. and in commercial transactions it does not in the end promote justice to seek strained interpretations in aid of those who do not protect themselves. ").
31. Drennan, 333 P.2d at 759 ("Had defendant's bid expressly stated or clearly implied that it was revocable at any time before acceptance we would treat it accordingly. ").
32. see Victor P. Goldberg, Traynor (Drennan) Versus Hand (Baird): Much Ado About (Almost) Nothing, 3 J. Legal Analysis 539 (2011).
33. U.C.C. § 2-206(1).
34. For example, the "check-the-box" rules found in section 301.7701-1-3 of the Treasury Regulations are altering rules governing the election of tax treatment of various business entities. By default, entities with two or more members that are not "per se" corporations are treated for tax purposes as partnerships. Treas. Reg. § 301.7701-3(b)(1)(i) (2010). But merely by "checking a box" on IRS Form 8832 in a timely manner, the entity can opt to be treated for tax purposes as a corporation. Treas. Reg. § 301.7701-3(a). The check-the-box requirement is an altering rule.
35. For example, Treasury Department Revenue Procedures 93-27 and 2001-43 provide a safe harbor procedure for treating the issuance of partnership profits interests as non-taxable. Rev. Proc. 93-27, 1993-27 C.B. 343.
36. Rev. Proc. 2001-43, 2001-34 I.R.B. 191.
37. See, e.g., U.C.C. § 2-609 cmt. 4 (describing what is sufficient and insufficient to constitute "adequate assurance").
38. U.C.C. § 2-207 cmt. 4 & 5 (providing examples of what mismatched terms of acceptance do and do not "materially alter" an initial offer).
39. Restatement (Second) of Contracts § 2 cmt. e, illus. 3 (1981) ("Illustration: A says to B, 'I will employ you for a year at a salary of $5,000 if I go into business.' This is a promise, even though it is wholly optional with A to go into business or not. ").
40. In one instance, the restaurant served only moderately spicy food (which the server later described as "only a three" on a four or five star scale, even after my son and I emphasized repeatedly that I wanted very, very spicy food and that was "all I cared about. " After asking subsequently why the food was not spicy, the server refused to tell me what words would be sufficient to receive spicy food on my next trip. I've had better luck using the phrase "phet maak, " which is Thai for "very spicy. "
41. see also Randy E. Barnett, The Sound of Silence: Default Rules and Contractual Consent, 78 Va. L. Rev. 821 (1992) (discussing the interaction between consent and default contractual rules).
42. Southern Mill Rules § 14 (Am. Cotton Shippers Ass'n 2004), available at http://www.acsacotton.org/acsa/acsalive.nsf/pages/B3107F6AB0BD3993862570FA0059CC2A.
43. see also Lisa Bernstein, Private Commercial Law in the Cotton Industry: Creating Cooperation Through Rules, Norms, and Institutions, 99 Mich. L. Rev. 1724 (2001) (discussing the cotton industry's adoption of an alternative, private system of contracting and dispute resolution).
44. Eyal Zamir, The Inverted Hierarchy of Contract Interpretation and Supplementation, 97 Colum. L. Rev. 1710 (1997). As in patent law where patent applicants are empowered in limited circumstances to act as their own lexicographers, see Merck & Co., Inc., v. Teva Pharms. USA, Inc., 395 F.3d 1364, 1370 (Fed. Cir. 2005) ("When a patentee acts as his own lexicographer in redefining the meaning of particular claim terms away from their ordinary meaning, he must clearly express that intent in the written description. "), private contractors might (or might not) be afforded the opportunity to displace the meaning of displacing terms.
45. Windows User Experience Interaction Guidelines, Microsoft, http://www.microsoft.com/ download/en/details.aspx?displaylang=en&id=2695 (last visited Sept. 22, 2011).
46. Windows User Experience Interaction Guidelines, Microsoft, http://www.microsoft.com/ download/en/details.aspx?displaylang=en&id=2695 (last visited Sept. 22, 2011).
47. Windows User Experience Interaction Guidelines, Microsoft, http://www.microsoft.com/ download/en/details.aspx?displaylang=en&id=2695 (last visited Sept. 22, 2011).
48. For example, when a user of Outlook unchecks the box (indicating a desire to not see confirmation windows again), a window might pop up asking, "Are you sure you never want to be asked again to confirm opening an attachment?", and also giving the user the option of not seeing this (third-order) confirmation screen. The confirmation that you want to forgo future confirmation would be a third-order rule, while the option of forgoing future third-order confirmation would be a fourth-order rule.
49. The theoretical possibility of altering rules of increasingly higher order (which are ended only by an ultimate mandatory order) parallels the possible higher-order liability regimes discussed in Ian Ayres, Optional Law: The Structure of Legal Entitlements 73-100 (2005) and Ian Ayres & J.M. Balkin, Legal Entitlements as Auctions: Property Rules, Liability Rules, and Beyond, 106 Yale L.J. 703 (1996).
50. Restatement (Second) of Contracts § 39(2) (1981) (emphasis added).
51. see also Ian Ayres, Never Say No: The Law, Economics, and Psychology of Counteroffers, 25 Ohio St. J. on Disp. Resol. 603 (2010) (explaining that the counteroffer "blow up" rule is one of the few defaults that can be unilaterally displaced by either the offeror or the offeree).
52. Compare Cal. Penal Code § 632 (West 2011) (criminalizing recording "confidential communication" such as a telephone call without the consent of all parties), with N.Y. Penal Law § 250 (McKinney 2008) (defining criminal wiretapping as "the intentional... recording of a telephonic... communication by a person other than a sender or receiver thereof, without the consent of either the sender or receiver").
53. See Subsection II.F.1.
54. For example, the counteroffer rule is contractible-unilaterally by either the offeror or the offeree.
55. But there is still not a systematic treatment in the Restatement, the UCC, or in casebooks detailing on a rule-by-rule and case-by-case basis which rules and holdings are merely defaults.
56. Maybe this will become a task for the next edition of my contracts textbook. Ian Ayres & Richard E. Speidel, Studies in Contract Law (7th ed. 2008).
57. My own scholarship has exemplified this failure. See, e.g., Ian Ayres, Three Proposals To Harness Private Information in Contract, 21 Harv. J. L. & Pub. Pol'y 135 (1997).
58. Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87 (1989) [hereinafter Ayres & Gertner, Filling Gaps].
59. Madeline Morris and Saul Levmore have helped on this project with regard to various exotic forms of liability rules. See Saul Levmore, Unifying Remedies: Property Rules, Liability Rules, and Startling Rules, 106 Yale L.J. 2149 (1997).
60. Madeline Morris, The Structure of Entitlements, 78 Cornell L. Rev. 822 (1993).
61. The idea that altering rules should be set to minimize the combination of error costs and transaction costs is analogous to the Calabresian idea that tort law should be set to minimize the combination of accident costs and precaution costs. Guido Calabresi, The Costs of Accidents: A Legal and Economic Analysis (1970).
62. See generally Cass R. Sunstein & Richard H. Thaler, Libertarian Paternalism Is Not an Oxymoron, 70 U. Chi. L. Rev. 1159, 1159 (2003) (arguing that libertarian paternalism is a coherent theory that "respect[s] freedom of choice" while influencing behavior through "default rules, framing effects, and starting points").
63. See I. MacNeil, Contracts: Exchange Transactions and Relations 346-47 (1978).
64. Guido Calabresi & A. Douglas Melamed, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 Harv. L. Rev. 1089, 1093 (1972).
65. Frank H. Easterbrook & Daniel R. Fischel, The Corporate Contract, 89 Colum. L. Rev. 1416, 1436-42 (1989).
66. Ian Ayres, Empire or Residue: Competing Visions of the Contractual Canon, 26 Fla. St. U. L. Rev. 897, 901 (1999).
67. Ian Ayres, Empire or Residue: Competing Visions of the Contractual Canon, 26 Fla. St. U. L. Rev. 897, 901 (1999).
68. Thomas W. Merrill & Henry E. Smith, Optimal Standardization in the Law of Property: The Numerus Clausus Principle, 110 Yale L.J. 1 (2000).
69. Thomas W. Merrill & Henry E. Smith, Optimal Standardization in the Law of Property: The Numerus Clausus Principle, 110 Yale L.J. 1 (2000).
70. Nicholas Quinn Rosenkranz, Federal Rules of Statutory Interpretation, 115 Harv. L. Rev. 2085, 2118 (2002) (imagining "a statute providing that 'laws of the United States, including this one, may be repealed only by the words "Mother, may I"'"). Bill Eskridge and Philip Frickey have described the rise of "super-strong clear statement rules" which "require a clearer, more explicit statement from Congress in the text of the statute, without reference to legislative history, than prior clear statement rules have required. " William N. Eskridge, Jr. & Philip P. Frickey, Quasi-Constitutional Law: Clear Statement Rules as Constitutional Lawmaking, 45 Vand. L. Rev. 593, 597 (1992) ("[T]he super-strong clear statement rules the Court has actually adopted protect constitutional values that are virtually never enforced through constitutional interpretation. That is, the Court in the 1980s has tended to create the strongest clear statement rules to confine Congress's power in areas in which Congress has the constitutional power to do virtually anything. "). See, e.g., Emps. v. Dep't of Pub. Health & Welfare, 411 U.S. 279, 285 (1973) (holding that Congress's 1966 amendments to the Fair Labor Standards Act (FLSA), which extended FLSA coverage to state employees, nevertheless did not abrogate state immunity against FLSA lawsuits absent clear statutory intention to waive state immunity to private actions).
71. For a comparison to statutory interpretation, see 1 Laurence H. Tribe, American Constitutional Law § 2-3, at 125 n.1 (3d ed. 2000). As Tribe explains, "The interpretive rules set forth in the McCarran-Ferguson Act and RFRA [the Religious Freedom Restoration Act] purport to require future Congresses to include specific references-to the insurance business or to RFRA itself, respectively-in order for statutes to bear particular meanings. "
72. Jacob & Youngs, Inc. v. Kent, 129 N.E. 889, 890-91 (N.Y. 1921) (finding that a buyer's duty to pay was not conditioned on a seller's performance of the promise to use "'standard pipe' of Reading manufacture, " but emphasizing that the parties might have used "apt and certain words to effectuate a purpose that performance of every term shall be a condition of recovery").
73. U.C.C. § 2-316(3)(a) (2003).
74. See Martin Lipton, Pills, Polls, and Professors Redux, 69 U. Chi. L. Rev. 1037 (2002).
75. Ian Ayres, Menus Matter, 73 U. Chi. L. Rev. 3, 3 (2006).
76. See Yair Listokin, If You Give Shareholders Power, Do They Use It? An Empirical Analysis, 166 J. Institutional & Theoretical Econ. 38 (2010).
77. Yair Listokin, What Do Corporate Default Rules and Menus Do? An Empirical Examination, 6 J. Empirical Legal Stud. 279 (2009) [hereinafter Listokin, Corporate Default Rules].
78. For a mathematical overview of the Pareto principle, see Michael Hardy, Pareto's Law, 32 Mathematical Intelligencer 38 (2010).
79. Oleg Mokhov, Use the 80-20 Rule To Increase Your Website's Effectiveness, Six Revisions (Sept. 2, 2010), http://sixrevisions.com/web_design/use-the-80-20-rule-to-increase-your-websites-effectiveness/?utm_content=Twitter.
80. In software, the disclosure of the altering rule is usually a suggestion (and not a declarative sentence along the lines of "click here if you want X"), underscoring that acts of interpretation are sometimes necessary for altering rule disclosures to be effective.
81. Once a company selects the fair-price option, no bidder can acquire the company unless the bidder (a) pays a 'fair price' as determined by a statutorily specified formula, (b) receives unanimous approval from the company's continuing directors, or (c) wins approval from two-thirds of the continuing directors and a majority of the votes entitled to be cast by shareholders unaffiliated with the bidder. See Ga. Code Ann. §§ 14-2-1111, 14-2-1112(b) (West 2011).
82. ("The requirements of this part shall not apply to business combinations of a corporation unless the bylaws of the corporation specifically provide that all of such requirements are applicable to the corporation. ").
83. See Yair Listokin, If You Give Shareholders Power, Do They Use It? An Empirical Analysis, 166 J. Institutional & Theoretical Econ. 38 (2010).
84. One could imagine a prime number restaurant, where each item is assigned a unique prime number and that the no-order default would only be displaced by customers ordering with a single number. For example, by telling the server "60, " a patron would be saying that her party wanted one order of "number 5, " one order of "number 3, " and two orders of "number 2"-since 60 = 2 x 2 x 3 x 5.
85. In such circumstances, it is possible to describe the altering rules as incomplete. But following the positivist tradition of Holmes, I would tend to describe the (as yet unspecified) content of defaults and altering rules as potentially susceptible to probabilistic prediction. See H.L.A. Hart, Positivism and the Separation of Law and Morals, 71 Harv. L. Rev. 593 (1958). A particular instance in which even relatively mature legal regimes will need to develop new altering rules concerns episodes where a legal default changes. For example, after joining the Berne Convention, the United States changed the default status of creative works fixed in a tangible medium of expression. Berne Convention Implementation Act of 1988, Pub. L. No. 100-568, 102 Stat. 2853 (codified as amended in scattered sections of 17 U.S.C.). Until that time, works by default were not copyrighted.
86. since then works by default were copyrighted. This change in default meant that for the first time, U.S. law had to create an altering rule establishing the conditions for opt out of copyright protection. Larry Lessig's Creative Commons project is through the lens of this Article a private attempt at providing contractual means to disclaim various parts or all of the copyright bundle of rights. See Creative Commons, http://www.creativecommons.org (last visited Nov. 29, 2011).
87. since then works by default were copyrighted. This change in default meant that for the first time, U.S. law had to create an altering rule establishing the conditions for opt out of copyright protection. Larry Lessig's Creative Commons project is through the lens of this Article a private attempt at providing contractual means to disclaim various parts or all of the copyright bundle of rights. See Creative Commons, http://www.creativecommons.org (last visited Nov. 29, 2011).
88. Ian Ayres, Menus Matter, 73 U. Chi. L. Rev. 3, 3 (2006).
89. Russell B. Korobkin & Thomas S. Ulen, Law and Behavioral Science: Removing the Rationality Assumption from Law and Economics, 88 Calif. L. Rev. 1051 (2000).
90. Analogously, if a jurisdiction adopted a "just cause" default, contractors might cheaply displace it to expand an employer's firing right with a provision stating that "employment is at will. "
91. U.C.C. § 2-316(3)(a) (2003) (stating that "as is" is sufficient to displace implied warranties).
92. § 2-319 (describing the impact of F.O.B. (free on board) and F.A.S. (free alongside) provisions).
93. see Clark A. Remington, Llewellyn, Antiformalism and the Fear of Transcendental Nonsense: Codifying the Variability Rule in the Law of Sales, 44 Wayne L. Rev. 29, 64 (1998) ("If the parties do not specify, should their contract be treated as a shipment contract or a destination contract? The Code does not say.... [W]hat Professors Ayres and Gertner have called a 'penalty default' would be appropriate. The consumer or unsophisticated merchant is more likely to be ignorant of these rules than is the sophisticated merchant, and is more likely on average to run afoul of a shipment contract default rule. "). But see U.C.C. § 2-503 cmt. 5 (stating that "under this Article the 'shipment' contract is regarded as the normal one and the 'destination' contract as the variant type").
94. Louis Kaplow, Rules Versus Standards: An Economic Analysis, 42 Duke L.J. 557 (1992) (analyzing the economic efficiency of legal rules as opposed to standards).
95. Pierre N. Leval, Judging Under the Constitution: Dicta About Dicta, 81 N.Y.U. L. Rev. 1249, 1259, 1275, 1277 (2006).
96. Neal Kumar Katyal, Judges as Advicegivers, 50 Stan. L. Rev. 1709, 1718 (1998).
97. see, e.g., New York v. United States, 505 U.S. 144, 166-67 (1992) ("This is not to say that Congress lacks the ability to encourage a State to regulate in a particular way, or that Congress may not hold out incentives to the States as a method of influencing a State's policy choices.... [U]nder Congress' spending power, 'Congress may attach conditions on the receipt of federal funds.'" (quoting South Dakota v. Dole, 483 U.S. 203, 206 (1987).
98. 583 F.3d 832 (Fed. Cir. 2009), aff'd, 131 S. Ct. 2188 (2011). In Stanford, an agreement in which an employee promised "I agree to assign... to Stanford... that right, title and interest in... such inventions as required by Contracts or Grants" was found to be ineffective to accomplish an automatic conveyance of the requisite interest in future inventions. (Quoting Copyright and Patent Agreement (emphasis added by court). But the opinion went further to suggest that the language "I will assign and do hereby assign... my right, title, and interest in... inventions" would have been sufficient.
99. Charles J. Goetz & Robert E. Scott, The Limits of Expanded Choice: An Analysis of the Interactions Between Express and Implied Contract Terms, 73 Calif. L. Rev. 261 (1985) (proposing an error-reduction theory of implied contract terms).
100. Jacobs & Youngs, Inc. v. Kent, 129 N.E. 889, 890-91 (N.Y. 1921).
101. 6 N.H. 481 (1834). The practice of announcing that a decision is a default without specifying associated altering words can also be seen in Baird Co. v. Gimbel Bros., 64 F.2d 344, 346 (2d Cir. 1933), and Drennan v. Star Paving Co., 333 P.2d 757 (Cal. 1958), discussed supra note 14. But see infra notes 109-114 and accompanying text (discussing Ferguson v. Phoenix Assurance Co., 370 P.2d 379 (Kan. 1962), in which the opinion suggests language which would be sufficient to lead to a different result (in this case no insurer liability).
102. 6 N.H. at 493-94 (finding if such language had been used "then there can be no pretence for a recovery if he voluntarily deserts the service before the expiration of the time").
103. 360 F.2d 674 (2d Cir. 1966).
104. 360 F.2d 674 (2d Cir. 1966).
105. 360 F.2d 674 (2d Cir. 1966).
106. This passage from the Ninth Circuit's opinion in United States v. McConney has been influential: The appropriate standard of review for a district judge's application of law to fact may be determined, in our view, by reference to the sound principles which underlie the settled rules of appellate review just discussed. If the concerns of judicial administration-efficiency, accuracy, and precedential weight-make it more appropriate for a district judge to determine whether the established facts fall within the relevant legal definition, we should subject his determination to deferential, clearly erroneous review. If, on the other hand, the concerns of judicial administration favor the appellate court, we should subject the district judge's finding to de novo review. Thus, in each case, the pivotal question is do the concerns of judicial administration favor the district court or do they favor the appellate court. 728 F.2d 1195, 1202 (9th Cir. 1984) (en banc), overruled on other grounds by Estate of Merchant v. Comm'r, 947 F.2d 1390 (9th Cir. 1991).
107. see Steven Alan Childress, A 1995 Primer on Standards of Review in Federal Civil Appeals, 161 F.R.D. 123 (1995) (discussing mixed questions of law and fact).
108. Martha S. Davis, A Basic Guide to Standards of Judicial Review, 33 S.D. L. Rev. 469, 474 (1988) (quoting the aforementioned passage from McConney for addressing "[t]hose issues which reach the reviewing court [that] tend to be largely in the gray area of mixed law/fact questions").
109. Kelly Kunsch, Standards of Review (State and Federal): A Primer, 18 Seattle U. L. Rev. 11, 27 (1994) (quoting the aforementioned passage from McConney for "stating that the appropriate standard should be determined by reference to the sound principles that underlie appellate review").
110. For example, the sufficient altering rule for disclaiming implied warranties found in UCC section 2-316(2) has not dissuaded courts from upholding other forms of disclaimer. See, e.g., Cirillo v. Slomin's Inc., 768 N.Y.S.2d 759, 772 (2003) (finding alternative words sufficient to disclaim).
111. One might worry that contractors would be cognitively burdened by having to learn a proliferating array of altering provisions. A simple response, however, is that contractors need not learn the rules. They are an additional tool that contractors can deploy, but their existence only provides an additional contracting option. And as described Subsection II.F.5, nondrafting parties will be able to easily learn the consequences of the provision by reading the case referenced in the provision itself. Alternatively, one might limit cognitive burden by limiting the footnote proposal to cases where a losing party convinces a court that a substantial number of future parties are likely interested in the alternative consequences. In these ways, the courts can respond to what might be called "altering rule fatigue. "
112. Ian Ayres, Three Proposals To Harness Private Information in Contract, 21 Harv. J.L. & Pub. Pol'y 135 (1997).
113. Miranda v. Arizona, 384 U.S. 436 (1966).
114. In contrast to the UCC's "magic words" approach with regard to the waivers of the implied warranty of merchantability, see supra note 11 and accompanying text, the Miranda court eschewed magic words and left the states and localities free to develop safeguards that were at least as effective as the Court's minimum. People might imagine the Miranda warning repeated on TV (and in real life) was established in the opinion as a sufficient admonishment. The opinion did contain language that gestures toward what a minimally acceptable warning should contain. For example, the Court held: [W]hen an individual is taken into custody... and is subjected to questioning, the privilege against self-incrimination is jeopardized.... He must be warned prior to any questioning that he has the right to remain silent, that anything he says can be used against him in a court of law, that he has the right to the presence of an attorney, and that if he cannot afford an attorney one will be appointed for him prior to any questioning if he so desires. Miranda, 384 U.S. at 478-79. But the most common incantation of the admonishment was drafted not by a court but by the Nevada County, California, district attorney and a California deputy attorney general, who were delegated the task by California's attorney general. Ronald Steiner, Rebecca Bauer & Rohit Talwar, The Rise and Fall of the Miranda Warnings in Popular Culture, 59 Clev. St. L. Rev. 219, 223 (2011).
115. Blair Anthony Robertson, No One Wants To Hear His Words: How Ex-DA Wrote Miranda Warning, Sacramento Bee, July 9, 2000, at A1. Justice Holmes's opinion in Baltimore & Ohio Railroad v. Goodman, 275 U.S. 66 (1927), denying relief for a fatally injured driver who failed to take reasonable precautions at a railroad crossing and later overruled in Pokora v. Wabash Railway, 292 U.S. 98 (1934) (Cardozo, J.), analogously gave rise to innumerable railroad cross signs warning drivers to stop, look, and listen.
116. See U.C.C. § 2A-214(2) (2003) ("[T]o exclude or modify the implied warranty of merchantability or any part of it the language must mention 'merchantability', be by a writing, and be conspicuous. ").
117. § 2-316(2) (same but with specific instructions for wording).
118. § 3-311(b) ("[T]he claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim. ").
119. § 2-202 cmt. 2 ("Even if the record is final, complete and exclusive it can be supplemented by evidence of noncontradictory terms drawn from an applicable course of performance, course of dealing, or usage of trade unless those sources are carefully negated by a term in the record. ").
120. § 2-206(1) ("Unless otherwise unambiguously indicated by the language or circumstances... an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances. ").
121. § 3-402(b) (2002) ("If a representative signs the name of the representative to an instrument and the signature is an authorized signature of the represented person, the following rules apply:... If the form of the signature shows unambiguously that the signature is made on behalf of the represented person who is identified in the instrument, the representative is not liable on the instrument. ").
122. see also Elliot Axelrod, Application of U.C.C. 2-202-The Integrated Agreement, 12 Cap. U. L. Rev. 1 (1982) (discussing integration under U.C.C. § 2-202).
123. See U.C.C. § 2-204(3) (2003) ("Even though one or more terms are left open, a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy. ").
124. Restatement (Second) of Contracts § 33(1)-(2) (1981) ("Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain.... The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy. ").
125. see also Mears v. Nationwide Mut. Ins. Co., 91 F.3d 1118, 1122 (8th Cir. 1996) ("In order to be binding, a contract must be reasonably certain as to its terms and requirements. ").
126. Parks v. Atlanta News Agency, 156 S.E.2d 137, 139 (Ga. Ct. App. 1967).
127. Steinberg v. Chi. Med. Sch., 354 N.E.2d 586, 589 (Ill. App. Div. 1976) ("[I]t is basic contract law that in order for a contract to be binding the terms of the contract must be reasonably certain and definite. ").
128. Arthur Linton Corbin, Corbin on Contracts § 95 (1952 & Supp. 1989).
129. Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87 (1989) [hereinafter Ayres & Gertner, Filling Gaps].
130. For example, an altering rule might require a seller/drafter to be subject to lost profit damages to disclose what those damages are expected to be. Section IV. B (discussing competition-enhancing altering rules that require disclosure of ancillary information).
131. Lon L. Fuller, Consideration and Form, 41 Colum. L. Rev. 799, 800-01 (1941).
132. Lon L. Fuller, Consideration and Form, 41 Colum. L. Rev. 799, 800-01 (1941).
133. Lon L. Fuller, Consideration and Form, 41 Colum. L. Rev. 799, 800-01 (1941).
134. see also David Gamage & Allon Kedem, Commodification and Contract Formation: Placing the Consideration Doctrine on Stronger Foundations, 73 U. Chi. L. Rev. 1299, 1309-10 (2006).
135. Relatedly, Microsoft also utilizes "warning" messages. Warning messages present a condition that might cause a problem in the future: The fundamental characteristic of warnings is that they involve the risk of losing one or more of the following: A valuable asset, such as important financial or other data. System access or integrity. Privacy or control over confidential information. User's time (a significant amount, such as 30 seconds or more). Warning Messages, MSDN Library: Windows User Experience Interaction Guidelines, http://msdn.microsoft.com/en-us/library/aa511263.aspx (last visited Nov. 29, 2011).
136. Confirmations, MSDN Library: Windows User Experience Interaction Guidelines, http://msdn.microsoft.com/en-us/library/aa511273.aspx (last visited Nov. 29, 2011).
137. Confirmations, MSDN Library: Windows User Experience Interaction Guidelines, http://msdn.microsoft.com/en-us/library/aa511273.aspx (last visited Nov. 29, 2011).
138. Linguists have similarly noted at times a willingness to sacrifice economy of speech to increase communicative accuracy. See James Gleick, The Information: A History, A Theory, A Flood 230 (2011) (noting that redundancy can reduce error). Evey forth ettr miht b delted rom his rtile ad it oul be lrgey inellgibe. The Gricean maxim of cooperative conversation argues that a cooperative conversant will, inter alia, be as concise as possible and as informative as necessary. H.P. Grice, Logic and Conversation, in 3 Syntax and Semantics: Speech Acts 41, 45 (Peter Cole & Jerry L. Morgan eds., 1975). Speakers at times choose to use more words to increase the chance that the audience will understand their intended message. But more surprising, questioners in many languages can influence the cost of answering even dichotomous (Yes/No) answers. For example, the simple convention of asking a question in the negative often has the declaration-demanding effect, that is, demanding more than a monosyllabic response. If you are asked "Did you go to the concert last night?, " English speakers would understand a monosyllabic response "Yes" as being sufficient to indicate that you attended the concert. But if the same question were instead asked in the negative ("Didn't you go to the concert?"), then a monosyllabic response "Yes" is more ambiguous. To avoid this ambiguity, speakers responding to this question are more likely to feel the need to use more than one syllable ("Yes, I did. "). A similar declarationforcing convention occurs with what linguists refer to as "tag" questions, in which the questioner conjoins a declaration with a question about the identical fact. For example, a lawyer might say to a witness, "You took the money, didn't you?" See Colleen B. Brennan, Linguistics and the Law: Review Article, CSA Discovery Guides (Sept. 2001), http://www.csa.com/discoveryguides/linglaw/overview.php.
139. For a general overview of tag questions in the English language, see Tag Question, Englishclub. com, http://www.englishclub.com/grammar/verbs-questions-tag.htm (last visited Nov. 28, 2011). Examples of standardized tag questions in other languages include Russian (not true?), French n'est-ce pas? (is it not?), and German nicht wahr? (not true?).
140. Confirmations, MSDN Library: Windows User Experience Interaction Guidelines, http://msdn.microsoft.com/en-us/library/aa511273.aspx (last visited Nov. 29, 2011).
141. Standard Icons, MSDN Library: Windows User Experience Interaction Guidelines, http://msdn.microsoft.com/en-us/library/aa511277.aspx (last visited Nov. 28, 2011).
142. Confirmations, MSDN Library: Windows User Experience Interaction Guidelines, http://msdn.microsoft.com/en-us/library/aa511273.aspx (last visited Nov. 29, 2011).
143. Confirmations, MSDN Library: Windows User Experience Interaction Guidelines, http://msdn.microsoft.com/en-us/library/aa511273.aspx (last visited Nov. 29, 2011).
144. I.
145. II. The condition in the text is derived by finding when the combined costs of the high-cost altering rule are lower than the combined costs of the lowcost altering rule.
146. The model ignores the impact of privately borne altering costs on the publicly borne costs of adjudicating contract disputes. If one plausibly assumes that higher ex ante costs in contracting will tend to reduce the ex post cost of judicial administration (because of more specificity in contracting), then one would find a broader range of parameters in which deviations from transaction cost minimization would be efficient.
147. However, giving users the ability to eliminate deletion confirmation pages may impact other users of the computer who mistakenly rely on deletion confirmation and are incensed at Microsoft when a computer they are using does not display the expected confirmation.
148. Confirmations, MSDN Library: Windows User Experience Interaction Guidelines, http://msdn.microsoft.com/en-us/library/aa511273.aspx (last visited Nov. 29, 2011).
149. Confirmations, MSDN Library: Windows User Experience Interaction Guidelines, http://msdn.microsoft.com/en-us/library/aa511273.aspx (last visited Nov. 29, 2011).
150. For example, in Microsoft Word, one way to put text in boldface type is to click on the commit button/icon labeled "B. "
151. Confirmations, MSDN Library: Windows User Experience Interaction Guidelines, http://msdn.microsoft.com/en-us/library/aa511273.aspx (last visited Nov. 29, 2011).
152. Confirmations, MSDN Library: Windows User Experience Interaction Guidelines, http://msdn.microsoft.com/en-us/library/aa511273.aspx (last visited Nov. 29, 2011).
153. Confirmations, MSDN Library: Windows User Experience Interaction Guidelines, http://msdn.microsoft.com/en-us/library/aa511273.aspx (last visited Nov. 29, 2011).
154. Confirmations, MSDN Library: Windows User Experience Interaction Guidelines, http://msdn.microsoft.com/en-us/library/aa511273.aspx (last visited Nov. 29, 2011).
155. Confirmations, MSDN Library: Windows User Experience Interaction Guidelines, http://msdn.microsoft.com/en-us/library/aa511273.aspx (last visited Nov. 29, 2011).
156. Confirmations, MSDN Library: Windows User Experience Interaction Guidelines, http://msdn.microsoft.com/en-us/library/aa511273.aspx (last visited Nov. 29, 2011).
157. Procedural unconscionability turns as well, however, on "oppression. " Ferguson v. Countrywide Credit Indus., Inc., 298 F.3d 778, 783 (9th Cir. 2002) ("'Oppression' arises from an inequality of bargaining power which results in no real negotiation and an absence of meaningful choice. "). In contexts of oppression, even clearly rendered provisions might not be enforced if they were substantively unconscionable.
158. Confirmations, MSDN Library: Windows User Experience Interaction Guidelines, http://msdn.microsoft.com/en-us/library/aa511273.aspx (last visited Nov. 29, 2011).
159. See, e.g., Zwierzycki v. Owens, 499 P.2d 996 (Wyo. 1972). An insufficiently nonspecific merger clause might merely provide: "THIS WRITING IS THE FINAL AND EXCLUSIVE STATEMENT AND EXPRESSION OF ALL OF THE TERMS OF THE AGREEMENT. " A more specific merger clause proposed by James J. White & Robert S. Summers, Uniform Commercial Code 111-13 (3d ed. 1988) more expressly disclaims the legal effect of any other warranties: THIS AGREEMENT SIGNED BY BOTH PARTIES AND SO INITIALED BY BOTH PARTIES IN THE MARGIN OPPOSITE THIS PARAGRAPH CONSTITUTES A FINAL WRITTEN EXPRESSION OF ALL THE TERMS OF THIS AGREEMENT AND IS A COMPLETE AND EXCLUSIVE STATEMENT OF THOSE TERMS.... ANY AND ALL REPRESENTATIONS, PROMISES, WARRANTIES OR STATEMENTS BY SELLER'S AGENT THAT DIFFER IN ANY WAY FROM THE TERMS OF THIS WRITTEN AGREEMENT SHALL BE GIVEN NO FORCE OR EFFECT.
160. see also Seibel v. Layne & Bowler, Inc., 641 P.2d 668, 671 n.1 (Or. Ct. App. 1982) (approving this language and warning that "unless the buyer is informed that the seller is disavowing those representations, the seller cannot expect protection from his agent's errors").
161. see also Seibel v. Layne & Bowler, Inc., 641 P.2d 668, 671 n.1 (Or. Ct. App. 1982) (approving this language and warning that "unless the buyer is informed that the seller is disavowing those representations, the seller cannot expect protection from his agent's errors").
162. 370 P.2d 379 (Kan. 1962).
163. 370 P.2d 379 (Kan. 1962).
164. 370 P.2d 379 (Kan. 1962).
165. 370 P.2d 379 (Kan. 1962).
166. Maybe this will become a task for the next edition of my contracts textbook. Ian Ayres & Richard E. Speidel, Studies in Contract Law (7th ed. 2008).
167. The decision in Ferguson also suggests how courts might harness the litigants in crafting more express altering rules. The decision refers (seemingly with approval) to insured advice as to what alternative language would have been sufficient: "The [insured] argues if the insurance company did not intend to pay for loss of money by burglary under the facts in this case, it should have had another item under its 'Exclusions' stating in substance 'that the company will not pay for any loss if a combination to a safe has been worked by manipulation.'" 370 P.2d at 463 (citing cases interpreting this kind of language).
168. See generally JMD Holding Corp. v. Cong. Fin. Corp., 828 N.E.2d 604 (N.Y. 2005) (summarizing requirements of nonforeseeability and proportionality to enforce liquidated damages clause).
169. Eric L. Talley, Contract Renegotiation, Mechanism Design, and the Liquidated Damages Rule, 46 Stan. L. Rev. 1195 (1994) (discussing the economic efficiency of nonenforcement of liquidated damages).
170. See, e.g., Tenn. Code Ann. § 29-5-302 (2011) ("[A] provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid... provided, that for contracts relating to farm property, structures or goods, or to property and structures utilized as a residence of a party, the clause providing for arbitration shall be additionally signed or initialed by the parties. ").
171. Wis. Admin. Code ATCP § 134.09(4)(b) (2011) ("A lien agreement under par. (a), if any, shall be executed in writing at the time of the initial rental agreement.... The lien agreement is not effective unless signed or initialed by the tenant. ").
172. See generally 15 U.S.C. § 1638(a)(2)(B) (2006) (requiring a statement disclosing the "consumer's right to obtain... a written itemization of the amount financed" that "shall include spaces for a 'yes' and 'no' indication to be initialed by the consumer").
173. Cal. Dep't of Real Estate, Mortgage Loan Broker Compliance Evaluation Manual 6 (2011), available at http://www.dre.ca.gov/pdf_docs/re_7.pdf (prohibiting changes to escrow instructions without the borrower initialing or signing).
174. Leon Austin, Deed of Trust: Initialing Each Page, ActiveRain (Mar. 2, 2008, 11:51 PM), http://activerain.com/blogsview/ 404441/deed-of-trust-initialing-each-page (discussing the importance of initialing "every page" of a deed of trust to ensure that "the borrower has seen and acknowledged each page of this document").
175. See, e.g., Jet Blue, http://www.jetblue.com (last visited Nov. 28, 2011) (allowing acceptance of its TrueBlue Program's terms and conditions by checking a box next to the statement "I have read and understood the TrueBlue Program terms & conditions").
176. Travel Risk Planning System (TRiPS), U.S. Army, https://safety.army.mil/trips (last visited Nov. 28, 2011).
177. E-mail from Dan Driscoll to author (Oct. 18, 2011, 6:29 PM) (on file with author).
178. J.N. Adams, The Standardization of Commercial Contracts, or the Contractualization of Standard Forms, 7 Anglo-Am. L. Rev. 136, 139 (1978).
179. "Captcha" displays are the distorted renderings of words used in online environments that attempt to ensure that a response is generated by a human and not a machine. Louis von Ahn et al., CAPTCHA: Using Hard AI Problems for Security, 2656 Lecture Notes in Computer Sci. 294, 294-95 (2003), available at http://www.springerlink.com/content/ p8t29.8a.6bxey8tvx/fulltext.pdf.
180. 45 C.F.R. § 164.530(b) (2010).
181. One could even imagine lawmakers adopting more far reaching "train-and-test" requirements before waiving other important rights, such as the right to trial. Instead of an admonishment that consists of a series of questions to which the defendant merely needs to answer "yes" (Judge: You understand that by waiving jury trial, you forfeit the right to X. Defendant: Yes, your Honor.), the law might require the defendant to pass at least a multiple-choice test that more searchingly explores whether the defendant actually comprehends (by being able to reflect back on) the implications of her waiver.
182. See U.S. Dep't of Hous. & Urban Dev. Form HUD-92902, Certificate of HECM Counseling (OMB No. 2502-0524) (2008), available at http://portal.hud.gov/hudportal/documents/ huddoc?id=92902.pdf.
183. see also Reverse Mortgage Elder Protection Act of 2009, ch. 236, Cal. Civ. Code §§ 1923.2, 1923.5 (West 2010) (prohibiting a lender from "accept[ing] a final and complete application for a reverse mortgage loan from a prospective applicant... without first receiving a certification from the applicant or the applicant's authorized representative that the applicant has received counseling").
184. Counseling, ReverseMortgageGuides. org, http://reversemortgageguides.org/reverse_mortgage/counseling (last visited Apr. 29, 2011).
185. Elizabeth Ecker, Friday Round-Up: Counseling De-Funded, Wholesale Gains, Reverse Mortgage Daily (Apr. 15, 2011, 3:07 PM), http://reversemortgagedaily.com/2011/04/15/ friday-round-up-counseling-de-funded-wholesale-gains.
186. See U.S. Dep't of Hous. & Urban Dev. Form HUD-92902, Certificate of HECM Counseling (OMB No. 2502-0524) (2008), available at http://portal.hud.gov/hudportal/documents/ huddoc?id=92902.pdf.
187. FINRA Rule 2360(b)(19), available at http://finra.complinet.com/en/display/display.html?rbid=2403&element_id=6306.
188. FINRA Rule 2360(b)(19), available at http://finra.complinet.com/en/display/display.html?rbid=2403&element_id=6306.
189. see also Arthur Joseph Lewis, Exchange Act Release No. 29794, 49 S.E.C. Docket 1487 (1991) (affirming a suitability violation and finding a financial adviser failed to adequately determine a customer's ability to understand and accept risks involved with trading options).
190. As a young professor with a Ph.D. in economics, I was turned down by several brokerage firms from qualifying for an option trading account predominantly because of my lack of liquid capital. See also Regulation D, 17 C.F.R. § 230.501 (2011) (defining an "accredited" investor for purposes of security registration exemption to include an individual with "income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year").
191. John E. Girouard, The Sophisticated Investor Farce, Forbes, Mar. 24, 2009, http://www.forbes.com/2009/03/24/accredited-investor-sec-personal-finance-financial-advisor-network-net-worth.html.
192. 20 U.S.C.A. § 1092(l)(1)(A) (West 2010). The statutory requirement to provide entrance counseling applies to loans "made, insured, or guaranteed" under the Federal Family Education Loan (FFEL) Program or the William D. Ford Federal Direct Loan Program, except for FFEL consolidation loans, student-borrowed FFEL PLUS loans, Federal Direct Consolidation Loans, and Direct PLUS loans "made on behalf of a student. " But see 34 C.F.R. § 685.304(a)(2) (2010) (requiring that entrance counseling be provided to "each graduate or professional student Direct PLUS Loan borrower prior to making the first disbursement of the loan unless the student borrower has received a prior Direct PLUS Loan or Federal PLUS Loan").
193. 20 U.S.C.A. § 1092(l)(1)(A). The subsection mandates that the information "shall be provided in a simple and understandable manner" through one of three alternative mechanisms: an in-person counseling session, a written form, or "online, with the borrower acknowledging receipt of the information. "
194. 20 U.S.C.A. § 1092(l)(2)(E), (H), (I).
195. 20 U.S.C.A. § 1092(l)(1)(B) (emphasis added).
196. See, e.g., Entrance Counseling (Fed Student Loans) Flashcards, Quizlet, http://quizlet.com/ 3930329/print (last visited Nov. 28, 2011) (listing questions and answers for the online entrance counseling test offered by the U.S. Department of Education). Students can pass merely by answering "all of the above" or "true" to all of the questions.
197. Alan Schwartz & Robert E. Scott, Contract Theory and the Limits of Contract Law, 113 Yale L.J. 541, 570-72 (2003).
198. See In re Soper's Estate, 264 N.W. 427 (Minn. 1935).
199. Alan Schwartz & Robert E. Scott, Contract Theory and the Limits of Contract Law, 113 Yale L.J. 541, 570-72 (2003).
200. I use the term "arbitrary" as it is used in trademark law. See Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 791 (5th Cir. 1983) ("Arbitrary or fanciful terms bear no relationship to the products or services to which they are applied. "). An arbitrary trademark is usually a common word that is used in a meaningless context-such as a Salty telephone or an Apple computer. See Robert P. Merges, Peter S. Menell & Mark A. Lemley, Intellectual Property in the New Technological Age 754 (5th ed. 2010).
201. See Stan Miastkowski, Step-By-Step: Find Software Easter Eggs, PCWorld (Feb. 27, 2003, 1:00 AM), http://www.pcworld.com/article/109378/stepbystep_find_software_easter_eggs.html.
202. see also Hidden DVD Easter Eggs, http://www.hiddendvdeastereggs.com (last visited Nov. 28, 2011) ("In 1885 the ruling family of Russia, the Romanovs, began a tradition of commissioning Carl Fabergé to create increasingly elaborate jeweled eggs which were exchanged by the family at Easter. Most of the known 50 eggs created contain hidden surprises such as miniature portraits, miniature coaches, and even clock-work birds that sing. It is for these beautiful works-of-art that software and DVD Easter Eggs are named.").
203. See Excel 97 Easter Egg-Flight Simulation, YouTube, (June 30, 2010), http://www.youtube.com/watch?v=-gYb5GUs0dM.
204. Excel Easter Egg-Excel 97 Flight Simulator-for Later Versions of Microsoft Excel, The Easter Egg Archive, http://www.eeggs.com/items/29841.html (last visited Nov. 28, 2011). Easter eggs sometimes exist as "cheats" in video games that provide players with an alternative means to move to the next level.
205. Excel Easter Egg-Excel 97 Flight Simulator-for Later Versions of Microsoft Excel, The Easter Egg Archive, http://www.eeggs.com/items/29841.html (last visited Nov. 28, 2011). Easter eggs sometimes exist as "cheats" in video games that provide players with an alternative means to move to the next level.
206. Jacob & Youngs, Inc. v. Kent, 129 N.E. 889, 891 (N.Y. 1921).
207. Charles J. Goetz & Robert E. Scott, The Limits of Expanded Choice: An Analysis of the Interactions Between Express and Implied Contract Terms, 73 Calif. L. Rev. 261 (1985) (proposing an error-reduction theory of implied contract terms).
208. Confirmations, MSDN Library: Windows User Experience Interaction Guidelines, http://msdn.microsoft.com/en-us/library/aa511273.aspx (last visited Nov. 29, 2011).
209. See Fed. Trade Comm'n, FTC Facts for Consumers: The Cooling-Off Rule: When and How To Cancel a Sale 1 (1990), available at http://www.ftc.gov/bcp/edu/pubs/consumer/ products/pro03.pdf. The United Kingdom has established an alternative to the cooling-off cancelation option-forcing seller/lenders to wait at least a week after a credit sale before they can enter into a separate contract with the buyer/borrower for the provision of credit life insurance. See U.K. Competition Comm'n, Market Investigation into Payment Protection Insurance 1 (2009) (concluding that the best approach to regulating credit life and similar products is to prohibit "distributors and intermediaries from selling [payment protection insurance] to their credit customers within seven days of a credit sale").
210. See Take Advantage of Florida Health Insurance Cooling-Off Period, Digi-Journal (Aug. 24, 2008), http://www.digijournal.net/healthmedical/take-advantage-of-florida-health-insurance-cooling-off-period.
211. Press Release, Mass. Office of Consumer Affairs and Bus. Regulation, State Launches New Reverse Mortgage Web Site for Seniors (Aug. 15, 2008), http://www.seniorcareinc.org/ResLib/Reverse_Mortgages.pdf ("Massachusetts law provides all reverse mortgage borrowers with a cooling off period which gives them the right not to proceed with the transaction for seven days after a loan commitment is issued by the mortgage lender.").
212. See Caroline O. Shoenberger, Consumer Myths v. Legal Realities: How Can Businesses Cope?, 16 Loy. Consumer L. Rev. 189, 216 (2004) ("The real story behind the cooling-off period, when it does exist in the law, is that it is generally ineffective against fraud. Take, for example, a door-to-door salesman for a roofing company [who], after signing a contract containing the legal cancellation notice, obtains a $300 down payment. Even if the resident exercises the right to the three-day cooling-off period, it's a challenge for the consumer to get back the deposit. ").
213. The pure soft-paternalism justification for prophylactic confirmations would have more difficulty justifying why the two-click altering rules are not themselves alterable-that is, why users aren't trusted with the option of moving to one click. Section I. B (discussing the two-click altering rule in Microsoft Outlook). One might give a soft-paternalism justification for the immutability of the two-click altering rule itself. For example, a primary user might be concerned that another family member will opt out of the prophylactic without warning the user, who is then exposed to unwanted risk.
214. See The State Is Looking After You, Economist, Apr. 8, 2006, http://www.economist.com/ node/6772346 (describing the goals of soft paternalism).
215. Confirmations, MSDN Library: Windows User Experience Interaction Guidelines, http://msdn.microsoft.com/en-us/library/aa511273.aspx (last visited Nov. 29, 2011).
216. Apple Human Interface Guidelines, Apple Developer, http://developer.apple.com/ue/switch/ windows.html#useTheAquaHumanInterfaceGuidelines (last visited Apr. 22, 2011).
217. See, e.g., Colin Camerer et al., Regulation for Conservatives: Behavioral Economics and the Case for "Asymmetric Paternalism, " 151 U. Pa. L. Rev. 1211 (2003).
218. Richard H. Thaler & Cass R. Sunstein, Libertarian Paternalism, 93 Am. Econ. Rev. 175 (2003).
219. A Westlaw search shows the term "sticky default" has appeared in at least sixty-four law review publications.
220. This altering-cost definition of sticky defaults is at odds with the way that Omri Ben Shahar and John Pottow used the term. See Omri Ben-Shahar & John A.E. Pottow, On the Stickiness of Default Rules, 33 Fla. St. U. L. Rev. 651 (2006). Ben-Shahar and Pottow suggested defaults could become sticky-not because of anything to do with the necessary or sufficient conditions of altering-but merely because opt-out may in some contexts seem like a "trick. "
221. One could conceive of the altering costs as the arbitrary ink costs of including legally required verbiage in the contract. Alternatively, lawmakers might require altering contractors to publicly burn the requisite amounts of money in order to alter. More realistically, the law might manipulate the cost of discovering the necessary conditions for altering by hiding the information in a labyrinth of code sections and common law decisions, forcing interested parties to retain legal representation in order to discover and implement the altering requisites. Higher costs of discovery are likely to have different distributional effects on repeat and non-repeat contractors as the repeat contractors might well be able to utilize their acquired knowledge altering prerequisites in repeated contracts. Failing to specify the words and actions sufficient to alter might also impose probabilistic altering costs because contractors who attempt to displace a default will bear the risk that the court might after the fact hold them to unintended terms. Section IV. A (discussing ex post penalties). One could construct examples where only a subset of contractors who had particularly high gains of trade from altering would bear these costs by attempting to alter.
222. Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87 (1989) [hereinafter Ayres & Gertner, Filling Gaps].
223. Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87 (1989) [hereinafter Ayres & Gertner, Filling Gaps].
224. An advantage of impeding altering rules is that the privately-born effort in contracting can reduce the publicly-born cost of adjudicating contract disputes.
225. See Steven L. Schwarcz, Systemic Risk, 97 Geo. L.J. 193 (2008).
226. See, e.g., Colin Camerer et al., Regulation for Conservatives: Behavioral Economics and the Case for "Asymmetric Paternalism, " 151 U. Pa. L. Rev. 1211 (2003).
227. Richard H. Thaler & Cass R. Sunstein, Libertarian Paternalism, 93 Am. Econ. Rev. 175 (2003).
228. Richard H. Thaler & Cass R. Sunstein, Libertarian Paternalism, 93 Am. Econ. Rev. 175 (2003).
229. John Geanakoplos, The Leverage Cycle, Cowles Found. (Discussion Paper No. 1715, 2009), http://ssrn.com/abstract=1441943.
230. 382 P.2d 109, 114 (Okla. 1962) (citing Chamberlain v. Parker, 45 N.Y. 569, 572 (1871). Peevyhouse concerned a defendant's failure to restore plaintiff's property after strip mining operations were completed. The cost of performing the restorative work was approximately nine times the diminution in value of the property resulting from the breach.
231. 382 P.2d 109, 114 (Okla. 1962) (citing Chamberlain v. Parker, 45 N.Y. 569, 572 (1871). Peevyhouse concerned a defendant's failure to restore plaintiff's property after strip mining operations were completed. The cost of performing the restorative work was approximately nine times the diminution in value of the property resulting from the breach.
232. Ian Ayres, Empire or Residue: Competing Visions of the Contractual Canon, 26 Fla. St. U. L. Rev. 897, 901 (1999).
233. Alan Schwartz & Robert E. Scott, Contract Theory and the Limits of Contract Law, 113 Yale L.J. 541, 570-72 (2003).
234. Contractor/sellers as repeat players are sufficiently sophisticated and the likelihood of nonpayment sufficiently salient that courts have insufficient reason to restrict their contractual freedom on hard-paternalism grounds. Moreover, while forfeitures can have third-party externalities, there was no reason to think that they needed to be particularly pronounced in this circumstance-especially because contractors might have insured against the risk of such nonpayment.
235. See Ian Ayres & Kristin Madison, Threatening Inefficient Performance of Injunctions and Contracts, 148 U. Pa. L. Rev. 45, 48 (1999).
236. For example, John Witt has cataloged a variety of barriers to displacing nineteenth century employment defaults that seem ill-suited to promoting equity or efficiency. John Fabian Witt, Rethinking the Nineteenth-Century Employment Contract, Again, 18 Law & Hist. Rev. 627, 640 (2000).
237. Capping altering rules are at times crudely implemented by "blue pencil" tests which strike out only so much of the provision as is necessary to render the provision enforceable-for example, striking "or elsewhere in England" in the phrase "in London or elsewhere in England. " Data Mgmt., Inc. v. Greene, 757 P.2d 62, 64 (Alaska 1988) (rejecting the "blue pencil" test).
238. Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87 (1989) [hereinafter Ayres & Gertner, Filling Gaps].
239. Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87 (1989) [hereinafter Ayres & Gertner, Filling Gaps].
240. Cass R. Sunstein, Human Behavior and the Law of Work, 87 Va. L. Rev. 205, 232 (2001).
241. Ian Ayres, Response, Valuing Modern Contract Scholarship, 112 Yale L.J. 881, 899 & n.79 (2003).
242. Ian Ayres, Response, Valuing Modern Contract Scholarship, 112 Yale L.J. 881, 899 & n.79 (2003).
243. 15 U.S.C. § 78u-5 (2006).
244. See, e.g., Slayton v. Am. Express Co., 604 F.3d 758, 773 (2d Cir. 2010) (finding that American Express's Form 10-Q failed to include the requisite words to fall within the safe harbor).
245. The "average prime offer rate" (APOR) is a regulatory input for determining "higher-priced mortgage loans" under Federal Reserve regulations made pursuant to the Home Ownership and Equity Protection Act. See 12 C.F.R. § 226.35(a)(2) (2010).
246. see also Solomon Maman, Note, New Tools for Combating Unfair, Deceptive and Abusive Mortgage Practices: New Amendments to Regulation Z, 21 Loy. Consumer L. Rev. 194, 225-27 (2008) (discussing the operation of APOR regulations).
247. Wis. Stat. § 138.04 (2011).
248. Wis. Stat. § 138.04 (2011).
249. see also Diversified Mgmt. Servs., Inc. v. Slotten, 351 N.W.2d 176, 181 (Wis. Ct. App. 1984) (reducing an award giving Diversified Management interest at 12% to the default of 5% because its contract with Slotten did not specify the higher interest level with sufficient clarity).
250. Ian Ayres, Empire or Residue: Competing Visions of the Contractual Canon, 26 Fla. St. U. L. Rev. 897, 901 (1999).
251. A similar characterization can be given to the contra proferentem rule that construes ambiguity against the drafting party. See Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 63 (1995) (stating that a broker who drafted an ambiguous document on choice of law "cannot now claim the benefit of the doubt").
252. Wilner's, Inc. v Fine, 266 S.E.2d 278, 280 (Ga. Ct. App. 1980) ("It is also a well established rule that ambiguities in writing are to be construed most strongly against the author or the party for whose benefit the writing was prepared, which, in this case, is the landlord. ").
253. Restatement (Second) of Contracts § 206 (1981) ("Interpretation Against the Draftsman"). Through the lens of altering theory, we can now see that this rule of interpretation combines both a penalty default and a clearstatement altering rule.
254. Michael S. Barr, Sendhil Mullainathan & Eldar Shafir, The Case for Behaviorally Informed Regulation, in New Perspectives on Regulation 25, 41-42 (David Moss & John Cisternino eds., 2009), available at http://www.tobinproject.org/sites/tobinproject.org/files/assets/ New_Perspectives_Ch2_Barr_Mullainathan_Shafir.pdf.
255. Michael S. Barr, Sendhil Mullainathan & Eldar Shafir, The Case for Behaviorally Informed Regulation, in New Perspectives on Regulation 25, 41-42 (David Moss & John Cisternino eds., 2009), available at http://www.tobinproject.org/sites/tobinproject.org/files/assets/ New_Perspectives_Ch2_Barr_Mullainathan_Shafir.pdf.
256. Michael S. Barr, Sendhil Mullainathan & Eldar Shafir, The Case for Behaviorally Informed Regulation, in New Perspectives on Regulation 25, 41-42 (David Moss & John Cisternino eds., 2009), available at http://www.tobinproject.org/sites/tobinproject.org/files/assets/ New_Perspectives_Ch2_Barr_Mullainathan_Shafir.pdf.
257. Michael S. Barr, Sendhil Mullainathan & Eldar Shafir, The Case for Behaviorally Informed Regulation, in New Perspectives on Regulation 25, 41-42 (David Moss & John Cisternino eds., 2009), available at http://www.tobinproject.org/sites/tobinproject.org/files/assets/ New_Perspectives_Ch2_Barr_Mullainathan_Shafir.pdf.
258. Michael S. Barr, Sendhil Mullainathan & Eldar Shafir, The Case for Behaviorally Informed Regulation, in New Perspectives on Regulation 25, 41-42 (David Moss & John Cisternino eds., 2009), available at http://www.tobinproject.org/sites/tobinproject.org/files/assets/ New_Perspectives_Ch2_Barr_Mullainathan_Shafir.pdf.
259. 15 U.S.C. § 1125(a) (2006).
260. see, e.g., Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1140 (9th Cir. 1997) ("Reactions of the public are typically tested through the use of consumer surveys. ").
261. Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 795 (5th Cir. 1983) ("[S]urvey evidence is the most direct and persuasive way of establishing secondary meaning. ").
262. see also Shari Seidman Diamond, Reference Guide on Survey Research, in Fed. Judicial Ctr., Reference Manual on Scientific Evidence 229, 235 (2d ed. 2000), available at http://www.fjc.gov/public/pdf.nsf/lookup/sciman00.pdf/$file/sciman00.pdf (discussing the routine use of survey evidence in Lanham Act cases).
263. In Lanham Act litigation, advertisers are only required to test consumers ex post-i.e., once the product is already on the market or the ad is already on the air-to demonstrate non-deceptiveness. But an altering rule might provide an ex ante safe harbor for contract drafters who tested in advance of litigation the impact of their disclosures. Phase 3 of the FDA drug review process (safety/effectiveness testing in a broad sample before the product goes on the market) is an example of testing that occurs before a product is marketed. See The FDA's Drug Review Process: Ensuring Drugs Are Safe and Effective, U.S. Food & Drug Admin., http://www.fda.gov/drugs/resourcesforyou/consumers/ucm143534.htm (last updated Nov. 8, 2011).
264. Because consumer surveys of this kind have substantial fixed-cost components, lawmakers might choose to limit the advance-testing requirement to sites with more than a certain number of registered users.
265. Michael S. Barr, Sendhil Mullainathan & Eldar Shafir, The Case for Behaviorally Informed Regulation, in New Perspectives on Regulation 25, 41-42 (David Moss & John Cisternino eds., 2009), available at http://www.tobinproject.org/sites/tobinproject.org/files/assets/ New_Perspectives_Ch2_Barr_Mullainathan_Shafir.pdf.
266. However, a plain-vanilla rule might impede market entrants from offering innovative financial products that are differentiated from the incumbents' plain-vanilla offerings. See Joshua D. Wright, The Antitrust-Consumer Protection Paradox: Two Policies at War with Each Other, 121 Yale L.J. 2216 (2012).
267. see also Barry Nalebuff & Ian Ayres, Why Not?: How To Use Everyday Ingenuity To Solve Problems Big and Small 145 (2006) (discussing three different types of mortgage products that are currently unavailable in the United States).
268. See U.C.C. § 2-305(1) (2003) ("The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery.... ").
269. Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87 (1989) [hereinafter Ayres & Gertner, Filling Gaps].
270. The enhanced disclosure is triggered for "high-cost" loans if the loan's annual percentage rate exceeds the rate on Treasury securities with a comparable maturity by eight percentage points or if certain fees on the loan exceed $400, a figure that is adjusted annually ($592 for 2011). See 12 C.F.R. §226.32 (2010).
271. see also Solomon Maman, Note, New Tools for Combating Unfair, Deceptive and Abusive Mortgage Practices: New Amendments to Regulation Z, 21 Loy. Consumer L. Rev. 194, 225-27 (2008) (discussing the operation of APOR regulations).
272. B-98-2 Vt. Code R. § 3(A) (1999).
273. B-98-2 Vt. Code R. § 3(C) (1999). This regulatory scheme is an altering rule that has three procompetitive effects: [I]t alerts borrowers to the fact that their broker might not be offering the best deal.
274. it encourages borrowers to shop around for better loan terms.
275. and it operates as an interest rate "ceiling", discouraging lenders from offering higher interest loans for fear that the borrower will be driven to other lenders because of the mandatory disclosure requirements. Raymond H. Brescia, Trust in the Shadows: Law, Behavior, and Financial Re-Regulation, 57 Buff. L. Rev. 1361, 1430-33 (2009).
276. Ian Ayres & F. Clayton Miller, "I'll Sell It to You at Cost": Legal Methods To Promote Retail Markup Disclosure, 84 Nw. U. L. Rev. 1047 (1990).
277. Markup information is at best an imperfect proxy. An inefficient seller may have high costs, and thus may offer an above-market price even though it is not making an unusually high profit. Or an unusually efficient seller, who has been able to produce a quality good at a lower price, may offer a competitive price even though it is making an unusually high profit.
278. Under the Real Estate Settlement Procedures Act of 1974, Pub. L. No. 95-533, 88 Stat. 1724, originators have been required to disclose both direct compensation and yield spread premiums paid to mortgage brokers for loan originations. See Howell E. Jackson & Laurie Burlingame, Kickbacks or Compensation: The Case of Yield Spread Premiums, 12 Stan. J.L. Bus. & Fin. 289 (2007).
279. However, for such competition-enhancing markup disclosure to be effective, the information must be disclosed in ways that it is actually understood and made salient to the borrower. Regulations promulgated by the Department of Housing and Urban Development provide that the "mortgage broker's fee must be itemized in the Good Faith Estimate and on the HUD-1 Settlement Statement. " 24 C.F.R. § 3500 app. B, illus. 13 (2010). It is unlikely that the placement of this information in these forms is an effective manner of conveying the information.
280. Zillow, http://www.zillow.com (last visited Dec. 5, 2011).
281. see also Michael E. Doversberger, Conveyancing at a Crossroads: The Transition to E-Conveyancing Applications in the U.S. and Abroad, 20 Ind. Int'l & Comp. L. Rev. 281, 303-04 (2010) (discussing the impact of websites like Zillow on information-gathering).
282. E.g., 15 U.S.C. § 1639h (2010) (requiring the creditor to obtain an appraisal and make that appraisal available to the borrower of a "higher-risk mortgage").
283. See Peter Schuck & Ian Ayres, Op-Ed., Car Buying, Made Simpler, N.Y. Times, Apr. 13, 1997, at F12.
284. A system mandating representations of certain facts (and the associated implicit promise that the representation is true) might dampen certain types of competition. For example, a seller that must disclose its markup might have reduced incentives to search for cheaper input prices.
285. Ian Ayres & F. Clayton Miller, "I'll Sell It to You at Cost": Legal Methods To Promote Retail Markup Disclosure, 84 Nw. U. L. Rev. 1047 (1990).
286. Ian Ayres & Barry Nalebuff, A Market Test for Credit Cards, Forbes, July 13, 2009, http://www.forbes.com/forbes/2009/0713/opinions-market-credit-cards-why-not.html.
287. 350 F.2d 445 (D.C. Cir. 1965).
288. The substance of the agreement is much less problematic because: (a) overcollateralized loans are unproblematically the norm in housing markets.
289. and (b) the value of any excess collateral levied upon beyond the level of indebtedness would need to be disgorged to the borrower. See Douglas G. Baird, The Boilerplate Puzzle, 104 Mich. L. Rev. 933, 944-45 (2006) ("Walker-Thomas took the security interest in Williams's other household goods because these assets were exempt [from creditor levy].... If Williams is to give up her right to protect exempt property, she should know that she has the right and that she is giving it up. ").
290. Altering penalties can also be deployed in support of impeding altering rules to help reduce negative externalities and paternalism concerns. When lawmakers craft impeding altering rules that deviate from transaction cost minimization, the complementary use of altering penalties will often be needed to channel contractors who attempt to opt out into using the higher-cost impeding methods.
291. See Michael C. Dorf, Incidental Burdens on Fundamental Rights, 109 Harv. L. Rev. 1175 (1996). Similarly, Article IV, Section 1 of the United States Constitution establishes not only a default (that "Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State") but also an altering rule ("Congress may by general Laws prescribe... the Effect thereof. "). U.S. Const. art. IV, § 1. Scholars disagree, however, about whether the Constitution places a mandatory floor on the ability of Congress to restrict States' "Full Faith and Credit" obligations.
292. Compare, e.g., Andrew Koppelman, Dumb and DOMA: Why the Defense of Marriage Act is Unconstitutional, 83 Iowa L. Rev. 1, 18 (1997) ("No. ")
293. Ralph U. Whitten, The Original Understanding of the Full Faith and Credit Clause and the Defense of Marriage Act, 32 Creighton L. Rev. 255 (1998) ("Yes. ").
294. See Michael C. Dorf, Incidental Burdens on Fundamental Rights, 109 Harv. L. Rev. 1175 (1996). Similarly, Article IV, Section 1 of the United States Constitution establishes not only a default (that "Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State") but also an altering rule ("Congress may by general Laws prescribe... the Effect thereof. "). U.S. Const. art. IV, § 1. Scholars disagree, however, about whether the Constitution places a mandatory floor on the ability of Congress to restrict States' "Full Faith and Credit" obligations.
295. Ian Ayres, Empire or Residue: Competing Visions of the Contractual Canon, 26 Fla. St. U. L. Rev. 897, 901 (1999).
296. Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87 (1989) [hereinafter Ayres & Gertner, Filling Gaps].
297. Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87 (1989) [hereinafter Ayres & Gertner, Filling Gaps].
298. Michael S. Barr, Sendhil Mullainathan & Eldar Shafir, The Case for Behaviorally Informed Regulation, in New Perspectives on Regulation 25, 41-42 (David Moss & John Cisternino eds., 2009), available at http://www.tobinproject.org/sites/tobinproject.org/files/assets/ New_Perspectives_Ch2_Barr_Mullainathan_Shafir.pdf.
299. Michael S. Barr, Sendhil Mullainathan & Eldar Shafir, The Case for Behaviorally Informed Regulation, in New Perspectives on Regulation 25, 41-42 (David Moss & John Cisternino eds., 2009), available at http://www.tobinproject.org/sites/tobinproject.org/files/assets/ New_Perspectives_Ch2_Barr_Mullainathan_Shafir.pdf.
300. Some of the analysis in this Section is presaged by the penetrating analysis (including the first analysis of name-changing altering rules) in Elizabeth F. Emens, Changing Name Changing: Framing Rules and the Future of Marital Names, 74 U. Chi. L. Rev. 761 (2007).
301. I speak of the spouses-to-be in gendered terms because at that time (as is sadly true today) my home state of Missouri did not see fit to extend equal marriage rights to same-sex couples.
302. Some of the analysis in this Section is presaged by the penetrating analysis (including the first analysis of name-changing altering rules) in Elizabeth F. Emens, Changing Name Changing: Framing Rules and the Future of Marital Names, 74 U. Chi. L. Rev. 761 (2007).
303. Some of the analysis in this Section is presaged by the penetrating analysis (including the first analysis of name-changing altering rules) in Elizabeth F. Emens, Changing Name Changing: Framing Rules and the Future of Marital Names, 74 U. Chi. L. Rev. 761 (2007).
304. Bernard S. Black, Is Corporate Law Trivial?: A Political and Economic Analysis, 84 Nw. U. L. Rev. 542 (1990).
305. See United States v. Virginia, 518 U.S. 515, 533 (1996).
306. Craig v. Boren, 429 U.S. 190, 197 (1976).
307. Craig, 429 U.S. at 197.
308. In 2006, President Bush signed the Pension Protection Act of 2006, Pub. L. No. 109-280, 120 Stat. 780 (codified as amended in scattered sections of 29 U.S.C.), available at http://www.gpo.gov/fdsys/pkg/PLAW-109publ280/pdf/PLAW-109publ280.pdf. Pursuant to that Act, the Department of Labor promulgated a regulation facilitating default choices through automatic enrollment in 401(k) retirement plans. See Default Investment Alternatives Under Participant Directed Individual Account Plans, 29 C.F.R. § 2550 (2011).
309. see also U.S. Dep't of Labor, Automatic Enrollment 401(k) Plans for Small Businesses (2010), available at http://www.dol.gov/ebsa/pdf/automaticenrollment401kplans.pdf.
310. See Barry Nalebuff & Ian Ayres, Why Not? How To Use Everyday Ingenuity To Solve Problems Big and Small 129-30 (2003).
311. Molière, Le Bourgeois Gentilhomme act 2, sc. 4 (Jean Serroy ed., Gallimard 1998) (1690), translated in The Yale Book of Quotations 530 (Fred R. Shapiro ed., 2006): Maitre de Philosophe: [T]out ce qui n'est point prose est vers.
312. et tout ce qui n'est point vers est prose. (All that is not prose is verse.
313. and all that is not verse is prose.).... Monsieur Jourdan: Par ma foi! il y a plus de quarante ans que je dis de la prose sans que j'en susse rien.... (Good heavens! For more than forty years I have been speaking prose without knowing it.).
314. Under Delaware corporate law, the default rule is that directors are liable to shareholders for duty-of-care violations, and the altering rule is that corporations can opt out of director duty-of-care liability through a charter amendment. Del. Code Ann. tit. 8, § 102(b)(7)(2011).
315. Under the U.S. Constitution, "[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people, " U.S. Const. amend. X, but Article V's amendment provision establishes an altering rule allowing the states and Congress to change that allocation of authority.
316. Sanford Levinson points out that there are also costs to making those altering rules too arduous. See, e.g., Sanford Levinson, Still Complacent After All These Years, 89 B.U. L. Rev. 409 (2009).
317. Sanford Levinson, The Political Implications of Amending Clauses, 13 Const. Comment. 107 (1996).