Eric Talley

Volume 89.4
Contractual Evolution
Matthew Jennejohn
Professor of Law, BYU Law School
Julian Nyarko
Assistant Professor of Law, Stanford Law School
Eric Talley
Isidor & Seville Sulzbacher Professor and Faculty Codirector of the Millstein Center for Global Markets & Corporate Ownership, Columbia Law School

Conventional wisdom portrays contracts as static distillations of parties’ shared intent at some discrete point in time. In reality, however, contract terms evolve in response to their environments, including new laws, legal interpretations, and economic shocks. While several legal scholars have offered stylized accounts of this evolutionary process, we still lack a coherent, general theory that broadly captures the dynamics of real-world contracting practice. This paper advances such a theory, in which the evolution of contract terms is a byproduct of several key features, including efficiency concerns, information, and sequential learning by attorneys who negotiate several deals over time.