Issue 3

Vagueness and Nondelegation

The void-for-vagueness doctrine and the nondelegation doctrine share an intuitive connection: when Congress drafts vague statutes, it delegates lawmaking authority to courts and the executive. In three recent cases, the Supreme Court gave expression to this link by speaking of the doctrines using nearly identical vocabulary. Notably, Justice Gorsuch suggested that as the nondelegation doctrine waned during the second half of the twentieth century, vagueness replaced it,—doing much of the doctrinal work that nondelegation would have done otherwise.

This Note tests that historical claim, and in doing so, offers two main contributions. First, it concludes that as a historical matter, Justice Gorsuch tells only part of the story. Although early vagueness doctrine in the late 1800s had strong streaks of nondelegation, vagueness doctrine of the post-New Deal era did not. The latter vagueness instead turned toward protecting individual rights and preventing racial discrimination by state and local governments. Here, nondelegation concerns were absent.

But the Roberts Court has rebooted the early vagueness doctrine that did indeed incorporate nondelegation. Modern vagueness cases thus resemble early vagueness cases. In these cases, absent are questions of individual rights, replaced by a focus on the separation of powers. In effect, there are two vagueness doctrines, one focused on individual rights and another centered around the separation of powers. This Note thus offers its second contribution: categorizing the Court’s vagueness cases and recognizing the categories for what they are.

“[O]nce we lift the veil of the void-for-vagueness doctrine, the revelations can be far reaching.”1 1.Risa L. Goluboff, Dispatch from the Supreme Court Archives: Vagrancy, Abortion, and What the Links Between Them Reveal About the History of Fundamental Rights, 62 Stan. L. Rev. 1361, 1387 (2010).Show More

Introduction

Suppose Congress enacts a statute that reads as follows: “Any person engaging in morally blameworthy conduct or lacking good moral character shall be punished as provided by this Code.” Is this statute unconstitutional? If so, why? Is it because of the void-for-vagueness doctrine, under which vague criminal laws violate the Constitution’s due process protections? Or is it because of the nondelegation doctrine, under which Congress cannot delegate its Article I legislative power to the executive and judicial branches through unintelligible statutes?

Or is it both?

In three recent U.S. Supreme Court cases, decided within a year of each other, these two relatively dormant doctrines—vagueness and nondelegation—simultaneously reemerged. In United States v. Davis2 2.139 S. Ct. 2319, 2336 (2019).Show More and Sessions v. Dimaya,3 3.138 S. Ct. 1204, 1223 (2018).Show More the Court struck down provisions in the federal criminal code as void for vagueness, while in Gundy v. United States, the Court addressed a nondelegation challenge to Congress’s delegation of authority to the Attorney General.4 4.139 S. Ct. 2116, 2122 (2019).Show More

At first glance, vagueness and nondelegation appear more different than alike. The Court has located the nondelegation doctrine in the Constitution’s “Vesting Clauses”—the Article I, Article II, and Article III provisions which vest the legislative, executive, and judicial powers in their respective branches—while vagueness doctrine has its roots in fair notice concerns and the Due Process Clauses. Vagueness’s most prominent application has been in cases involving state and local vagrancy offenses and status crimes, while the nondelegation doctrine has been employed in largely conservative-libertarian projects aimed to rein in the ever-expanding administrative and regulatory state.

Despite these differences, the two doctrines share an intuitive connection: when legislatures draft vague statutes, they delegate lawmaking authority to other branches of government. The Court gave expression to this link in Dimaya, Davis, and Gundy, describing the two doctrines using starkly similar vocabulary and shedding light on their interrelatedness. In Dimaya, Justice Kagan referred to vagueness as the “corollary” of the separation of powers that undergirds the nondelegation doctrine.5 5.Dimaya, 138 S. Ct. at 1212.Show More In his Dimaya dissent, Justice Thomas noted that the “Court’s precedents have occasionally described the vagueness doctrine in terms of nondelegation.”6 6.Id.at 1248 (Thomas, J., dissenting).Show More Most notably, in Gundy, Justice Gorsuch argued that “most any challenge to a legislative delegation can be reframed as a vagueness complaint,” and that the Court’s “void-for-vagueness cases became much more common soon after the Court began relaxing its approach to legislative delegations.”7 7.Gundy, 139 S. Ct. at 2142 (Gorsuch, J., dissenting).Show More That is, as the Court backed away from using the nondelegation doctrine to police Congress’s delegation of its legislative power in the second half of the twentieth century, the Court began using vagueness to do the work that nondelegation would have done otherwise.

This Note picks up on the thread that Justice Gorsuch started in Gundy and explores the relationship between vagueness and nondelegation. In so doing, this Note offers two main contributions.

First, it concludes that as a historical matter, Justice Gorsuch’s claim about vagueness replacing nondelegation tells only part of the story. The Note looks to pre- and post-New Deal doctrinal development of both vagueness and nondelegation to conclude that while the doctrines have some overlap, Justice Gorsuch overstated their connection. The Court’s vagueness cases from the late 1800s, the early days of the doctrine, did indeed police legislative delegations. But the cases that came after 1937 did not. The Court instead began using vagueness to protect individual rights like free speech. It also wielded vagueness to protect racial minorities from invidious discrimination by state and local police. In these post-New Deal vagueness cases, federal nondelegation concerns were largely absent. This version of vagueness did not replace the nondelegation doctrine, which the Court largely discarded.

Still, the Roberts Court picked up where the early vagueness cases left off; nondelegation again entered the realm of vagueness. In modern vagueness cases, concerns of individual rights and free speech are absent. Also absent are issues of invidious racial discrimination. These cases instead emphasize the proper constitutional role of Congress, the executive, and the judiciary within the federal separation of powers. To the extent that the Court and Justice Gorsuch see an overlap between vagueness and nondelegation, it is this line of cases that they see.

In effect, there are two vagueness doctrines. One comprises the majority of the Court’s vagueness cases after the New Deal era, including the landmark case Papachristou v. City of Jacksonville. The second has its origins in the earliest vagueness cases. And although this latter doctrine subsided after 1937, the Court has revived it in recent cases like Dimaya and Davis.

This Note categorizes the Court’s vagueness cases into (1) Rights-Based Vagueness and (2) Structure-Based Vagueness. Although both categories of cases involve due process concerns, they diverge from there. Cases like Papachristou, and their emphasis on individual rights and equal protection, comprise Rights-Based Vagueness. In contrast, Structure-Based Vagueness is the vagueness that the Court employs in Dimaya, Davis, and Gundy. In these latter cases, the Court emphasizes nondelegation and the separation of powers. To the extent that vagueness and nondelegation converge, it is in the context of Structure-Based Vagueness. This Note thus offers its second contribution: categorizing the Court’s vagueness cases and recognizing the categories for what they are.

Recognizing Structure-Based Vagueness for what it is has important implications. Identifying this category adds analytical clarity to the literature on the intersection of vagueness and nondelegation, which to this point has remained cursory and underdeveloped. It further offers insight into how a vagueness doctrine that was previously wielded to address racial discrimination by local police has transformed into a vagueness doctrine that seemingly only has purchase in challenges to federal malum prohibitum crimes. This Note thus adds to the realist literature that views vagueness doctrine as a doctrinal makeweight, which can be reshaped to serve broader and unrelated judicial values and priorities.

Identifying Structure-Based Vagueness has practical consequences too. Structure-Based Vagueness offers common ground to criminal justice reformers and immigrant rights advocates on the one hand, and conservative-libertarians interested in curbing the power of the federal government on the other. By employing the rhetoric of separation of powers in their vagueness arguments, criminal justice reformers and immigrant rights advocates can win meaningful progressive victories from a Court enamored with nondelegation. Moreover, Structure-Based Vagueness offers a limiting principle to opponents of a more aggressive nondelegation doctrine. By tying Structure-Based Vagueness and its nondelegation component to their underlying rationales, skeptics of the nondelegation doctrine can cabin its application to only criminal and penal laws, reducing the potentially harmful impact that a more rigid doctrine would have on environmental, labor, and other economic regulations.

This Note proceeds in four Parts. Part I provides a brief summary of the vagueness and nondelegation doctrines and canvasses literature that addresses their intersection. It then summarizes the Court’s decisions in Dimaya, Davis, and Gundy and draws out Justice Gorsuch’s specific claim about the relationship between vagueness and nondelegation. Part II inspects the historical trajectory of both doctrines, beginning just before the Lochner era and ending with today’s Roberts Court. It uses this history to challenge Justice Gorsuch’s claim. Part III then categorizes vagueness into its two conceptions—Rights-Based Vagueness and Structure-Based Vagueness. Part IV explores the theory behind Structure-Based Vagueness and identifies future applications. A brief conclusion follows.

  1. Risa L. Goluboff, Dispatch from the Supreme Court Archives: Vagrancy, Abortion, and What the Links Between Them Reveal About the History of Fundamental Rights,
    62

    Stan. L. Rev.

    1361, 1387 (2010).

    ↑

  2. 139 S. Ct. 2319, 2336 (2019). ↑
  3. 138 S. Ct. 1204, 1223 (2018). ↑
  4. 139 S. Ct. 2116, 2122 (2019). ↑
  5. Dimaya, 138 S. Ct. at 1212. ↑
  6. Id. at 1248 (Thomas, J., dissenting). ↑

  7. Gundy, 139 S. Ct. at 2142 (Gorsuch, J., dissenting). ↑

Pretrial Detention and the Value of Liberty

How dangerous must a person be to justify the state in locking her up for the greater good? The bail reform movement, which aspires to limit pretrial detention to the truly dangerous—and which has looked to algorithmic risk assessments to quantify danger—has brought this question to the fore. Constitutional doctrine authorizes pretrial detention when the government’s interest in safety “outweighs” an individual’s interest in liberty, but it does not specify how to balance these goods. If detaining ten presumptively innocent people for three months is projected to prevent one robbery, is it worth it?

This Article confronts the question of what degree of risk justifies pretrial preventive detention if one takes the consequentialist approach of current law seriously. Surveying the law, we derive two principles: 1) detention must avert greater harm (by preventing crime) than it inflicts (by depriving a person of liberty); and 2) prohibitions against pretrial punishment mean that the harm experienced by the detainee cannot be discounted in the cost-benefit calculus. With this conceptual framework in place, we develop a novel empirical method for estimating the relative personal cost of incarceration and crime victimization that we call relative harm valuation: a survey method that asks respondents to choose between being the victim of certain crimes or being jailed for varying time periods. The results suggest that even short periods of incarceration impose grave harms, such that a person must pose an extremely high risk of serious crime in order for detention to be justified. No existing risk assessment tool is sufficient to identify individuals who warrant detention. The results demonstrate that the stated consequentialist rationale for pretrial detention cannot begin to justify our current detention rates. They suggest that the existing system is instead inflicting pretrial punishment, and they counsel a rethinking of pretrial law and policy.

Introduction

Suppose we can avert an armed robbery by incarcerating ten people for thirty days each. We do not know which of the ten would otherwise commit the crime, and the incarceration is not justified as punishment. Is it worth it? How many people should we be willing to lock up to prevent one future crime?

“None!” you may answer, on the ground that the state may never lock up any person solely to prevent future crime—at least not any person who is a responsible agent with her cognitive faculties intact. We live in a liberal democracy, not a dystopia.1 1.See generally Minority Report (20th Century Fox 2002) (depicting dystopian future in which future-criminals are incapacitated before they commit any crime).Show More You may be forgiven; this view has wide currency among thoughtful people.2 2.See, e.g., Laurence H. Tribe, An Ounce of Detention: Preventative Justice in the World of John Mitchell, 56 Va. L. Rev. 371, 376–77 (1970) [hereinafter Tribe, An Ounce of Detention]; Laurence H. Tribe, Trial by Mathematics: Precision and Ritual in the Legal Process, 84 Harv. L. Rev. 1329, 1370 (1971); see also infra notes 78–79 and accompanying text (addressing this perspective).Show More

But your indignation runs counter to the facts and the law. Contrary to common perception, preventive detention is not just the stuff of science fiction. Governments of contemporary liberal democracies routinely engage in preventive detention of many forms. Pretrial detention is one type. Other types include juvenile detention, immigration detention, and manifold variants of short- and long-term civil commitment.3 3.See infra notes 58–64 and accompanying text.Show More In each of these fields, the government claims authority to deprive people of liberty solely on the basis that custody is necessary to prevent a person from committing future harm.4 4.There are also forms of preventive detention that seek to avert unintentional rather than, or in addition to, willful acts of harm. Examples include quarantine to prevent the spread of communicable disease, as we know all too well, and jury sequestration. For discussions of the law of jury sequestration, see, e.g., Marcy Strauss, Sequestration, 24 Am. J. Crim. L. 63 (1996); James P. Levine, The Impact of Sequestration on Juries, 79 Judicature 266 (1996).Show More The state makes no claim that the person to be detained has forfeited her right to liberty or that the deprivation is deserved. The detention is not punishment. Instead, the detention is “regulatory.” The U.S. Supreme Court has long authorized such practices.5 5.See infra notes 34–43 and accompanying text.Show More Indeed, it is hard to imagine functional governance without them.

Nonetheless, preventive detention is terrifying. It does not adhere to the central constraint on criminal punishment—that it may be imposed only for a past wrongful act.6 6.See H.L.A. Hart, Punishment and Responsibility: Essays in the Philosophy of Law 1, 23 (2d ed. 2008) (explaining how this constraint on punishment “maximizes individual freedom within the coercive framework of law”); Douglas Husak, Overcriminalization: The Limits of the Criminal Law (2008) (describing conceptual constraints on punishment).Show More The justification for preventive detention is merely “risk,” and risk is amorphous. So the central question for any preventive detention regime is what kind and degree of risk is sufficient to justify the detention at issue. If we incarcerate people who have a 20% chance of otherwise committing an assault during the period of detention, for instance, we can expect to prevent one assault for every five detentions. Is such detention justified? How much liberty should we sacrifice to prevent one crime?

As is, there is nothing approaching a consensus answer to this question.7 7.See generally Christopher Slobogin, A Jurisprudence of Dangerousness, 98 Nw. U. L. Rev. 1 (2003) (urging scholars and courts to develop more coherent standards for preventive deprivations of liberty).Show More Courts and legislatures routinely assert the regulatory power of the state to detain those who pose a great enough risk, but even in long-standing preventive detention regimes, the relevant legal standards are vague at best.8 8.See infra Section I.A.Show More Generations of scholars have lamented the lack of legal guidance. Few have offered specific guidance themselves.9 9.See Alan Dershowitz, The Origins of Preventive Confinement in Anglo-American Law — Part I: The English Experience, 43 U. Cin. L. Rev. 1, 60 (1974) (“We have not even begun to ask these kinds of questions, or to develop modes of analysis for answering them.”).Show More The problem is that the question requires an explicit tradeoff between liberty and security, values that are infrequently measured and difficult to compare.

Difficulties notwithstanding, the bail reform movement has now placed the question of what risk justifies preventive detention squarely at center stage.10 10.See Sandra G. Mayson, Dangerous Defendants, 127 Yale L.J. 490, 494 (2018) [hereinafter Mayson, Dangerous Defendants] (“[Bail reform] holds great promise, but also raises an extremely difficult question: what probability that a person will commit unspecified future crime justifies detention . . . ?”).Show More Jurisdictions around the country are forsaking money bail in favor of more intentional decisions about pretrial custody. The new systems aspire to detain those arrested persons who pose a true threat and release everyone else on appropriate conditions.11 11.See Stephanie Wykstra, Bail Reform, Which Could Save Millions of Unconvicted People from Jail, Explained, Vox (Oct. 17, 2018, 7:30 AM), https://www.vox.com/future-perfect/2018/10/17/17955306/bail-reform-criminal-justice-inequality [https://perma.cc/V3Q​S-J69G].Show More Flight risk is also a concern in the pretrial context, but a distinctly secondary one in practice.12 12.Samuel R. Wiseman, Pretrial Detention and the Right to Be Monitored, 123 Yale L.J. 1344, 1351 (2014) (“Historically, the U.S. system of bail and associated pretrial detention was employed solely to prevent pretrial flight, but increasingly, the many individuals awaiting trial in jail are detained because a judge has deemed them potentially dangerous.”). For a thoughtful discussion of the various kinds of risk, often lumped together as “flight risk,” see Lauryn P. Gouldin, Defining Flight Risk, 85 U. Chi. L. Rev. 677 (2018).Show More The aspiration to limit detention to the dangerous requires each pretrial system to decide what kind of threat justifies detention. The advent of statistical risk assessment has crystallized the question further by forcing courts and stakeholders to deal in quantified probabilities and to confront the limits of prediction.13 13.John Monahan & Eric Silver, Judicial Decision Thresholds for Violence Risk Management, 2 Int’l J. of Forensic Mental Health 1, 6 (2003) (“The necessity for choosing a decision threshold for risk management decisions, long implicit in clinical risk assessment, is made apparent in actuarial prediction.”).Show More Every jurisdiction that authorizes pretrial detention, and every court that imposes it, must decide what degree of risk warrants depriving a person of liberty.

This Article tackles the question of when pretrial detention is warranted to prevent future crime.14 14.Cf. Mayson, Dangerous Defendants, supra note 10, at 557–60 (reserving judgment on the degree of risk that justifies preventive detention). This Article does not address the power of courts to detain an accused person who has violated a court-imposed condition of release.Show More Whereas the great bulk of prior scholarship on pretrial detention has focused on the shortcomings of current law,15 15.E.g., Albert W. Alschuler, Preventive Pretrial Detention and the Failure of Interest-Balancing Approaches to Due Process, 85 Mich. L. Rev. 510 (1986); Chalmous G. Reemes, United States v. Salerno: The Validation of Preventive Detention and the Denial of a Presumed Constitutional Right to Bail, 41 Ark. L. Rev. 697, 719–22 (1988).Show More we take existing law as a given. This is not to endorse existing law as representing the best possible policy approach to detention. The project, rather, is to take existing legal doctrine seriously and to ask when detention meets the law’s criteria. We present a conceptual framework for answering the question and then a novel empirical method for implementing the framework.

The conceptual framework is a straightforward consequentialist one. Constitutional law authorizes pretrial detention when the government’s interest in safety “outweighs” the individual’s interest in liberty.16 16.See infra notes 29–44 and accompanying text.Show More On our reading, this doctrine establishes a simple cost-benefit framework.17 17.See infra Section I.B.Show More In order to be justified in those terms, pretrial detention must, at minimum, avert more harm than it inflicts. The most significant harms at stake are the cost of crime to the potential crime victim and the cost of pretrial detention to the detainee. Within this calculus, prohibitions against pretrial punishment mean that the well-being of the arrestee must be fully considered. The challenge is thus to develop a direct measure of the relative harms of incarceration and crime.

To meet the challenge, the Article deploys a novel form of contingent valuation that we call “relative harm valuation” (“RHV”).18 18.We developed this concept and conducted our first study in 2017 but learned in the spring of 2020 that others have used the same method in other contexts. Most notably, the legal scholars Jane Bambauer and Andrea Roth have used a similar survey method to estimate when carceral punishment becomes “excessive” for constitutional purposes. See infra note 119. Conversations with Bambauer and Roth were valuable in refining our approach. We consider the existence of these other efforts to be a strength of the present study rather than a weakness. The other studies to have deployed RHV have also documented a surprising degree of aversion to incarceration or involuntary commitment among a sizable portion of respondents. See infra note 141.Show More It aims to estimate the relative harm of incarceration versus crime victimization while avoiding some of the distortions that plague traditional cost-benefit and contingent-valuation methods. Our method is intentionally simple, and it echoes John Rawls’ famous notion that the principles of justice are those that a rational person would choose behind a “veil of ignorance” as to her own traits and position in society.19 19.John Rawls, A Theory of Justice 118 (2d ed. 1999).Show More Adapting his effort to detach normative analysis from self-interest, we conduct a survey that requires respondents to compare the costs of detention and crime directly, imagining themselves as both detainee and as crime victim. We ask questions like, “How much time in jail is as bad as being the victim of a burglary?” and, “If you had to choose between spending a month in jail or being the victim of a burglary, which would you choose?”20 20.This method is a variant of the survey technique formally known as “contingent valuation,” which has provided most of the commonly used estimates for the costs of crime. See infra notes 103–07 and accompanying text.Show More

The survey results suggest that people view incarceration as an incredibly harmful experience. Most would choose crime-victimization over even short jail stints. The median respondent says that a single day in jail is as costly as a burglary, that three days are as costly as a robbery, and that a month in jail is as costly as an aggravated assault. Notably, these results are very consistent across race, gender, and socioeconomic class of the respondent. They are also quite similar for those who have personal experience with incarceration or crime victimization. Aversion to incarceration is broad and widespread.

By focusing on costs to the crime victim and incarcerated person, our method puts aside indirect and fiscal costs. However, we expect these to accrue on both sides of the ledger. Crime can create fear in the community, but so can incarceration. Law enforcement and prosecution are expensive to the state, but so is incarceration. Including such costs might make the analysis more nuanced, but we do not think it would meaningfully change the main result: that even a short period of incarceration inflicts very grave harms.

The severity of the harm that incarceration inflicts (according to our median respondent) means that preventive detention can only be justified on consequentialist grounds if there is a very high risk that the person would otherwise commit serious crime. Jailing a person for thirty days is justifiable only if it is expected to prevent crimes at least as harmful as a serious assault. Jailing someone for just one day is justifiable only if it averts crime as serious as burglary. These risk thresholds are higher than we can meet with statistical evidence. In studies of one widely used risk assessment tool, for instance, even defendants in the highest risk group have only a 2.5% chance of rearrest for a violent offense within a month.21 21.See Thomas Blomberg, William Bales, Karen Mann, Ryann Meldrum & Joe Nedelec, Ctr. for Criminology and Pub. Pol’y Rsch., Validation of the COMPAS Risk Assessment Classification Instrument 47 tbl.8 (2010).Show More We would have to detain forty such people for one month each, not just one person, to expect to avert one violent offense.

Given the high risk-threshold for preventive detention and the limits of our predictive abilities, pretrial detention on the basis of dangerousness should be rare. But it is not. On any given day, almost 500,000 people are held in jails awaiting trial.22 22.Zhen Zeng, Bureau of Just. Stat., Jail Inmates in 2017, 1 fig.1, 5 tbl.3 (2019), www.bjs.gov/content/pub/pdf/ji17.pdf [https://perma.cc/NPM3-NP84].Show More Many more cycle through pretrial detention each year.23 23.Id. at 1.Show More A significant number of these detentions may be the unintentional result of a court setting money bail that the accused cannot afford.24 24.E.g., Sandra G. Mayson, Detention by Any Other Name, 69 Duke L.J. 1643, 1653 (2020) [hereinafter Mayson, Detention by Any Other Name] (citing statistics regarding detention on money bail).Show More A much smaller number may be justified on the basis of flight risk—a ground for detention that this paper does not address.25 25.But see Wiseman, supra note 12, at 1349 (arguing that detention is rarely necessary to manage flight risk given advancing surveillance technologies).Show More Yet the centrality of public-safety discourse in the growing backlash to bail reform efforts demonstrates that crime risk dwarfs flight risk, in the view of both courts and the public, as a concern in the pretrial phase.26 26.See, e.g., Jesse McKinley, The Bail Reform Backlash that Has Democrats at War, N.Y. Times (Feb. 14, 2020), https://www.nytimes.com/2020/02/14/nyregion/new-york-bail-reform.html [https://perma.cc/NU9F-B3RZ]; see also, e.g., H.R. 81, 2020 Leg., Reg. Sess. (Ala. 2020) (proposing amendment to state constitution to permit pretrial detention for dangerousness).Show More The focus on crime risk suggests that a substantial portion of the millions of people who cycle through jails each year are there because they were perceived to be dangerous.

There are many possible explanations for the dramatic gap between theory and practice. The most likely, we surmise, is that current practice reflects an implicit discounting of the value of detainees’ well-being relative to the well-being of potential crime victims. This might be because accused people are viewed as criminals who have forfeited the right to liberty; because accused people are disproportionately Black, brown, and poor while the paradigmatic crime victim in the public imagination is white and wealthy; because pretrial detention is assumed to be credited against legitimate punishment imposed after conviction; or all of the above.

Some of these grounds for discounting the welfare of arrestees are easier to dismiss than others. The most difficult ground to dismiss is the idea that arrestees are not entitled to the same concern as crime victims because they are not wholly innocent; they are in some manner culpable for having created the risk at issue. As one of us has written elsewhere, this notion runs headlong into the presumption of innocence and prohibition on pretrial punishment, foundational principles of the American legal order.27 27.Mayson, Dangerous Defendants, supra note 10, at 537–38.Show More It is extremely difficult to reconcile those principles with the idea that the state can discount the welfare of arrestees on the basis of their (probable) guilt. Yet the intuition that the state may treat accused persons as having impaired moral status is strong, and in some circumstances, it seems unjust not to discount an arrestee’s welfare relative to a person the arrestee is credibly alleged to have threatened.

This Article does not resolve the conflict between the prohibition on pretrial punishment and the human impulse to discount the welfare of arrestees in a cost-benefit calculus. Rather, it demonstrates that a rigorous consequentialist analysis raises deep questions about how the law ought to value individual liberty and welfare, questions that echo across many fields of law. It also demonstrates that, left unexamined, consequentialist rationales can mask decision-making processes that rely on judgments of worth or that are dictated by perverse incentives. Confronting these processes will be important to the long-term success of pretrial reform.

This Article makes four contributions. The first is to fully articulate the consequentialist conceptual framework for detention decisions that current law entails. The second is the method we devise to apply that framework: relative harm valuation, which allows for the comparison of intangible harms without resorting to the distorting intermediary of dollars. This Article’s third contribution is the information the survey reveals: Even short periods of jail detention impose harms as grave as serious crimes. The logical corollary is that if we value the liberty of accused people and crime victims by a common standard, pretrial detention for the purpose of preventing crime is almost never warranted on cost-benefit grounds. Finally, in illuminating the chasm between the cost-benefit rationale for pretrial detention and our actual practices, this Article highlights the need for policymakers, courts, and bail reformers to grapple with the retributive impulse and institutional incentives that shape detention practice on the ground.

This Article proceeds in three Parts. Part I describes the legal doctrine that authorizes pretrial preventive detention on cost-benefit grounds. It extrapolates the consequentialist conceptual framework that this doctrine implies, then explains why existing empirical methods are inadequate to weigh the harm of criminal victimization against the harm of incarceration. Part II presents our relative-harm-valuation surveys and explains the results. Part III explores the implications of the survey results for pretrial policy and beyond.

  1. See generally Minority Report (20th Century Fox 2002) (depicting dystopian future in which future-criminals are incapacitated before they commit any crime). ↑
  2. See, e.g., Laurence H. Tribe, An Ounce of Detention: Preventative Justice in the World of John Mitchell, 56 Va. L. Rev. 371, 376–77 (1970) [hereinafter Tribe, An Ounce of Detention]; Laurence H. Tribe, Trial by Mathematics: Precision and Ritual in the Legal Process, 84 Harv. L. Rev. 1329, 1370 (1971); see also infra notes 78–79 and accompanying text (addressing this perspective). ↑
  3. See infra notes 58–64 and accompanying text. ↑
  4. There are also forms of preventive detention that seek to avert unintentional rather than, or in addition to, willful acts of harm. Examples include quarantine to prevent the spread of communicable disease, as we know all too well, and jury sequestration. For discussions of the law of jury sequestration, see, e.g., Marcy Strauss, Sequestration, 24 Am. J. Crim. L. 63 (1996); James P. Levine, The Impact of Sequestration on Juries, 79 Judicature 266 (1996). ↑
  5. See infra notes 34–43 and accompanying text. ↑
  6. See H.L.A. Hart, Punishment and Responsibility: Essays in the Philosophy of Law 1, 23 (2d ed. 2008) (explaining how this constraint on punishment “maximizes individual freedom within the coercive framework of law”); Douglas Husak, Overcriminalization: The Limits of the Criminal Law (2008) (describing conceptual constraints on punishment). ↑
  7. See generally Christopher Slobogin, A Jurisprudence of Dangerousness, 98 Nw. U. L. Rev. 1 (2003) (urging scholars and courts to develop more coherent standards for preventive deprivations of liberty). ↑
  8. See infra Section I.A. ↑
  9. See Alan Dershowitz, The Origins of Preventive Confinement in Anglo-American Law — Part I: The English Experience, 43 U. Cin. L. Rev. 1, 60 (1974) (“We have not even begun to ask these kinds of questions, or to develop modes of analysis for answering them.”). ↑
  10. See Sandra G. Mayson, Dangerous Defendants, 127 Yale L.J. 490, 494 (2018) [hereinafter Mayson, Dangerous Defendants] (“[Bail reform] holds great promise, but also raises an extremely difficult question: what probability that a person will commit unspecified future crime justifies detention . . . ?”). ↑
  11. See Stephanie Wykstra, Bail Reform, Which Could Save Millions of Unconvicted People from Jail, Explained, Vox (Oct. 17, 2018, 7:30 AM), https://www.vox.com/future-perfect/2018/10/17/17955306/bail-reform-criminal-justice-inequality [https://perma.cc/V3Q​S-J69G]. ↑
  12. Samuel R. Wiseman, Pretrial Detention and the Right to Be Monitored, 123 Yale L.J. 1344, 1351 (2014) (“Historically, the U.S. system of bail and associated pretrial detention was employed solely to prevent pretrial flight, but increasingly, the many individuals awaiting trial in jail are detained because a judge has deemed them potentially dangerous.”). For a thoughtful discussion of the various kinds of risk, often lumped together as “flight risk,” see Lauryn P. Gouldin, Defining Flight Risk, 85 U. Chi. L. Rev. 677 (2018). ↑
  13. John Monahan & Eric Silver, Judicial Decision Thresholds for Violence Risk Management, 2 Int’l J. of Forensic Mental Health 1, 6 (2003) (“The necessity for choosing a decision threshold for risk management decisions, long implicit in clinical risk assessment, is made apparent in actuarial prediction.”). ↑
  14. Cf. Mayson, Dangerous Defendants, supra note 10, at 557–60 (reserving judgment on the degree of risk that justifies preventive detention). This Article does not address the power of courts to detain an accused person who has violated a court-imposed condition of release. ↑
  15. E.g., Albert W. Alschuler, Preventive Pretrial Detention and the Failure of Interest-Balancing Approaches to Due Process, 85 Mich. L. Rev. 510 (1986); Chalmous G. Reemes, United States v. Salerno: The Validation of Preventive Detention and the Denial of a Presumed Constitutional Right to Bail, 41 Ark. L. Rev. 697, 719–22 (1988). ↑
  16. See infra notes 29–44 and accompanying text. ↑
  17. See infra Section I.B. ↑
  18. We developed this concept and conducted our first study in 2017 but learned in the spring of 2020 that others have used the same method in other contexts. Most notably, the legal scholars Jane Bambauer and Andrea Roth have used a similar survey method to estimate when carceral punishment becomes “excessive” for constitutional purposes. See infra note 119. Conversations with Bambauer and Roth were valuable in refining our approach. We consider the existence of these other efforts to be a strength of the present study rather than a weakness. The other studies to have deployed RHV have also documented a surprising degree of aversion to incarceration or involuntary commitment among a sizable portion of respondents. See infra note 141. ↑
  19. John Rawls, A Theory of Justice 118 (2d ed. 1999). ↑
  20. This method is a variant of the survey technique formally known as “contingent valuation,” which has provided most of the commonly used estimates for the costs of crime. See infra notes 103–07 and accompanying text. ↑
  21. See Thomas Blomberg, William Bales, Karen Mann, Ryann Meldrum & Joe Nedelec, Ctr. for Criminology and Pub. Pol’y Rsch., Validation of the COMPAS Risk Assessment Classification Instrument 47 tbl.8 (2010). ↑
  22. Zhen Zeng, Bureau of Just. Stat., Jail Inmates in 2017, 1 fig.1, 5 tbl.3 (2019), www.bjs.gov/content/pub/pdf/ji17.pdf [https://perma.cc/NPM3-NP84]. ↑
  23. Id. at 1. ↑
  24. E.g., Sandra G. Mayson, Detention by Any Other Name, 69 Duke L.J. 1643, 1653 (2020) [hereinafter Mayson, Detention by Any Other Name] (citing statistics regarding detention on money bail). ↑
  25. But see Wiseman, supra note 12, at 1349 (arguing that detention is rarely necessary to manage flight risk given advancing surveillance technologies). ↑
  26. See, e.g., Jesse McKinley, The Bail Reform Backlash that Has Democrats at War, N.Y. Times (Feb. 14, 2020), https://www.nytimes.com/2020/02/14/nyregion/new-york-bail-reform.html [https://perma.cc/NU9F-B3RZ]; see also, e.g., H.R. 81, 2020 Leg., Reg. Sess. (Ala. 2020) (proposing amendment to state constitution to permit pretrial detention for dangerousness). ↑

  27. Mayson, Dangerous Defendants, supra note 10, at 537–38. ↑

Collaborative Intent

Why do parties—even sophisticated ones—draft contracts that are vague or incomplete? Many others have tackled this question, but this Article argues that there is an overlooked, common, and powerful reason for contractual gaps. Using original interviews with dealmakers, it introduces a theory of “collaborative intent” to show that the bureaucratic deal-building process within companies can help explain why contracts are incomplete, vague, and otherwise seemingly irrational. The institutional details of dealmaking are important but understudied, and have wide-ranging implications for contract theory, design, and interpretation.

This Article makes three contributions to the literature. First, using original interviews with in-house dealmakers, it provides the literature’s first account of how deals are made within companies. Both economists and legal scholars have tackled the puzzle of incomplete contracting, but leading explanations overlook the critical influence of companies’ internal deal-building process. Unlike individuals who enter into contracts, sophisticated business parties do not have monolithic intent. Instead, even before taking a seat at the negotiation table, business parties engage in a complex, internal bargaining process that requires many intra-corporate constituencies to weigh in and sign off on the deal. The result is that sophisticated business parties bring multiple agendas to the negotiation table, and those agendas are reflected in the contract. Second, collaboration complicates intent, especially for sophisticated parties. Rather than being the result of rational, considered contract design, contractual gaps may be mere byproducts of the contract-shepherding process within the firm. Finally, this Article offers practical guidance to courts and contract designers about the overlooked and rampant intra-corporate bargaining and pork-barreling process. It helps them account for collaborative intent in ex ante contract design and ex post contract enforcement.

Introduction

Four weeks before Halloween in 2018, a Delaware Chancery Court decision spooked the corporate world. In an unprecedented move, the court released German pharmaceutical giant Fresenius from its $4.75 billion contract to buy U.S. generic drug manufacturer Akorn based on a contract term called the material adverse change clause.1 1.Akorn, Inc. v. Fresenius Kabi AG, No. CV 2018-0300, 2018 WL 4719347 (Del. Ch. Oct. 1, 2018), aff’d, 198 A.3d 724 (Del. 2018).Show More The decision in Akorn, Inc. v. Fresenius Kabi AG was the first time Delaware courts had found that a company triggered a material adverse change clause, and it sparked a storm of anxiety and commentary.2 2.Many major firms issued client alerts, immediately digesting the landmark case for their clients. See, e.g., David Leinwand, James E. Langston & Mark E. McDonald, Akorn v. Fresenius: A MAC in Delaware, Cleary Gottlieb Steen & Hamilton LLP (Oct. 11, 2018), https://www.clearymawatch.com/2018/10/akorn-v-fresenius-mac-delaware [https://perma.cc​/43KW-C54E]; Chris Gorman & Lisa Richards, Akorn v. Fresenius: Important Practical Lessons from First-Ever Material Adverse Effect, Fenwick & West LLP (Oct. 24, 2018), https://www.fenwick.com/publications/pages/akorn-v-fresenius-important-practical-lessons-from-first-ever-material-adverse-effect.aspx [https://perma.cc/9KPX-75MZ]; Peter A. Atkins & Edward B. Micheletti, ‘Reasonable Efforts’ Clauses in Delaware: One Size Fits All, Unless . . ., Skadden, Arps, Slate, Meagher & Flom LLP (Nov. 1, 2018), https://www.​skadden.com/insights/publications/2018/10/reasonable-efforts-clauses-in-delaware [https://p​erma.cc/JR7Z-FYAP]; Grant J. Esposito, David J. Fioccola & Robert W. May, Delaware Court of Chancery Finds a Material Adverse Event and Excuses Buyer from Obligation to Close in Akorn v. Fresenius Kabi AG, Morrison & Foerster LLP (Oct. 9, 2018), https://www.mofo.com/resources/insights/181009-delaware-material-adverse-event.html [htt​ps://perma.cc/FE72-NR7Q].Show More

In every merger and acquisition (“M&A”) deal, there is a material adverse change provision: a long-winded, heavily negotiated provision choked with exceptions and caveats. Material adverse change provisions almost always say the same thing: that if something huge and unexpected happens between the contract’s signing and the deal’s closing, one or both parties can back out of the deal.3 3.Albert Choi & George Triantis, Strategic Vagueness in Contract Design: The Case of Corporate Acquisitions, 119 Yale L.J. 848, 854 (2010) [hereinafter Choi & Triantis, Strategic Vagueness](defining a material adverse change clause in a contract as one that “permit[s] the buyer to avoid the closing of a deal if a material change has occurred in the financial condition, assets, liabilities, business, or operations of the target firm”).Show More And, perhaps most surprisingly, despite the long negotiations and dense legalese, material adverse change provisions are vague.4 4.Id. at 853 (noting that material adverse change clauses are vague, but “among the most heavily negotiated nonprice terms”).Show More

Vague provisions like these are common but surprising. In M&A contracts, for example, parties routinely haggle over whether they will use “best efforts,” “commercially reasonable best efforts,” or “reasonable best efforts” to accomplish certain tasks—and each of these standards will be left unspecified and unquantified.5 5.See Scot Baker & Albert Choi, Contract’s Role in Relational Contract, 101 Va. L. Rev. 559, 565 (2015) (describing the common “best efforts” provisions as “a fault-based and open-ended standard”); Anthony J. Casey & Anthony Niblett, Self-Driving Contracts, 43 J. Corp. L. 1, 8 (2017) (“[Parties can choose to] use a vague standard that also requires a court to fill in the details after the fact. This could be a clause that requires something like ‘reasonable efforts,’ ‘best efforts,’ or ‘commercially reasonable efforts.’”); Victor P. Goldberg, In Search of Best Efforts: Reinterpreting Bloor v. Falstaff, 44 St. Louis L. Rev. 1465, 1465 (2000) (“When contracting parties cannot quite define their obligations, they often resort to placeholder language, like ‘best efforts.’”); Robert E. Scott, Contract Design and the Shading Problem, 99 Marq. L. Rev. 1, 20 (2015) (“[I]n the past fifty years, parties have increasingly inserted vague terms such as ‘best efforts,’ reasonable best efforts,’ or ‘commercially reasonable best efforts’ as modifiers that are combined with specific of precise performance obligations under the contract.”). The contracts law case Bloor v. Falstaff, 601 F.2d 609 (2d Cir. 1979), is another famous case about best efforts clauses.Show More In debt contracts, borrowers promise to let lenders conduct “routine” inspections, without specifying what is routine.6 6.In A. Gay Jenson Farms Co. v. Cargill, 309 N.W.2d 285 (Minn. 1981), the well-known agency law case, for example, large international conglomerate Cargill lent money to a small Minnesota grain elevator operator, in part on the condition that Cargill could conduct routine inspections of the grain elevator. The intrusive nature of the inspections became one of the reasons that the grain elevator operator’s other creditors later sued Cargill, arguing that the grain elevator operator was an agent of Cargill and that Cargill should be liable for the operator’s debts. Id. at 290–91.Show More In just about any corporate contract, parties promise “material” compliance or compliance that does not rise to a “material adverse effect,” again without specifying what those thresholds might mean.7 7.Robert Malionek & Jon Weichselbaum, Five Keys to Analyzing a Material Adverse Effect, N.Y.L.J. (Mar. 6, 2019), https://www.lw.com/thoughtLeadership/five-keys-analyzing-materia​l-adverse-effect-ny-law-journal [https://perma.cc/TM95-FQKH] (noting that “[m]ateriality is both qualitative and quantitative” and that in M&A contracts, representations can be made “that reasonably would be expected to result in [a material adverse change]”).Show More In each of these circumstances, sophisticated parties, who have both the technical sophistication and financial means to draft specific, complete provisions, choose instead to embrace vague, incomplete ones.

The persistence of vague provisions, incomplete contracts, and other such contractual oddities has long plagued both legal scholars and economists—and neither literature has a shortage of explanations. Economist and Nobel Prize laureate Oliver Hart famously notes that contracts are necessarily incomplete: there are no parties, no circumstances, where every contingency can be thought of and thought out ex ante.8 8.See Oliver Hart, The Nobel Prize, https://www.nobelprize.org/prizes/economic-sciences/​2016/hart/facts/ [https://perma.cc/E6MG-HZY4] (last visited Nov. 10, 2021) (“In the mid-1980s, [Hart] contributed to the theory of incomplete contracts. . . . These analyses have been significant for, among other things, governance of companies and the design of laws and institutions.”); Oliver Hart & John Moore, Foundations of Incomplete Contracts, 66 Rev. Econ. Stud. 115 (1999) [hereinafter Hart & Moore, Foundations of Incomplete Contracts](developing a model for the idea that contracts are incomplete); Oliver D. Hart, Incomplete Contracts and the Theory of the Firm, 4 J.L. Econ. & Org. 119 (1988); Oliver Hart, Dep’t of Econ., Harvard Univ., Incomplete Contracts and Control, Nobel Prize Lecture 372–73 (Dec. 8. 2016), https://www.nobelprize.org/uploads/2018/06/hart-lecture.pdf [https://perma.cc/7TK​E-49TD] [hereinafter Hart, Incomplete Contracts & Control](noting that, although economists spent many decades working on questions involving complete contracts, “[a]ctual contracts are not like this, as lawyers have recognized for some time. They are poorly worded, ambiguous, and leave out important things. They are incomplete.”).Show More Many scholars have argued convincingly that vagueness in contracts—especially in contracts between sophisticated business parties—is intentional and rational: provisions that are rarely litigated but expensive to negotiate, such as material adverse effect provisions, are particularly well-suited to vagueness.9 9.Choi & Triantis, Strategic Vagueness, supra note 3, at 852–53, 855 (arguing that parties can use vague contract provisions efficiently—for example, material adverse change clauses in acquisition agreements may remain vague because they are rarely litigated); Robert E. Scott & George G. Triantis, Anticipating Litigation in Contract Design, 115 Yale L.J. 814, 818–22 (2006) [hereinafter Scott & Triantis, Anticipating Litigation] (examining the efficiency of investment in the design and enforcement phases of the contracting process and arguing that parties can lower overall contracting costs by using vague contract terms ex ante and shifting investment to the ex post enforcement phase); Robert E. Scott & George G. Triantis, Incomplete Contracts and the Theory of Contract Design, 56 Case W. Res. L. Rev. 187, 195–96 (2005) (considering the role of litigation in motivating contract design).Show More Still others have argued that contracts do not need to be complete or specific. Community and industry norms can and do fill the gap where contracts are vague—and sometimes even when contracts do not even exist.10 10.See Ronald J. Gilson, Charles Sabel & Robert E. Scott, Braiding: The Interaction of Formal and Informal Contracting in Theory, Practice, and Doctrine, 110 Colum. L. Rev. 1377, 1398–99 (2010) [hereinafter Gilson et al., Braiding] (discussing the “rivalry” between formal and informal enforcement for contracts and noting that the two can substitute for each other or complement each other); see also Lisa Bernstein, Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry, 21 J. Legal Stud. 115, 121–24 (1992) [hereinafter Bernstein, Opting Out] (describing trade association enforcement of contractual breaches); Lisa Bernstein, Private Commercial Law in the Cotton Industry: Creating Cooperation Through Rules, Norms, and Institutions, 99 Mich. L. Rev. 1724, 1725 (2001) (describing the cotton industry’s alternative system of enforcement to the typical legal system).Show More And, in those cases, it is the threat of informal sanctions, such as loss of reputation, that curbs bad behavior, even without a legally binding contract.11 11.Informal sanctions are particularly effective in small, tight-knit communities where parties have many points of contact. A robust literature has documented the role of norms and informal sanctions in a variety of interesting settings. See Robert C. Ellickson, Of Coase and Cattle: Dispute Resolution Among Neighbors in Shasta County, 38 Stan. L. Rev. 623, 628, 677 (1986) [hereinafter Ellickson, Of Coase and Cattle] (describing how rural cattle ranchers in Shasta County, California, abide by norms rather than rules and how animal trespass disputes are settled by self-help rather than formal legal enforcement mechanisms); Robert C. Ellickson, A Hypothesis of Wealth-Maximizing Norms: Evidence from the Whaling Industry, 5 J.L. Econ. & Org. 83, 84–85 (1989) (presenting evidence of informal enforcement—norms—overtaking formal enforcement in the whaling industry); Peter T. Leeson, An-arrgh-chy: The Law and Economics of Pirate Organization, 115 J. Pol. Econ. 1049, 1051 (2007) (describing the extralegal systems that pirates developed to provide checks on captain predation and to “create piratical law and order”); Bernstein, Opting Out, supra note 10, at 124 (describing how a diamond-merchant trade association in New York City helps to enforce contracts); Gillian K. Hadfield & Iva Bozovic, Scaffolding: Using Formal Contracts to Support Informal Relations in Support of Innovation, 2016 Wis. L. Rev. 981, 987, 1017 (describing the way in which commercial contracting parties across a variety of industries use a mix of formal and informal contracts to support their business relationships); Lisa Bernstein, Beyond Relational Contracts: Social Capital and Network Governance in Procurement Contracts, 7 J. Legal Analysis 561, 562 (2015) (describing how original equipment manufacturers in the Midwest have used a mix of formal contracts, relational contracts, and other tools to build and support their business relationships); Jonathan M. Barnett, Hollywood Deals: Soft Contracts for Hard Markets, 64 Duke L.J. 605, 607 (2015) (discussing the use of non-binding agreements—or “soft contracts”—in modern Hollywood filmmaking).Show More

In many contexts, these explanations are convincing. Consider a simple apartment lease signed between one landlord and one tenant. Rather than spending a lot of time up-front discussing the specific condition in which the tenant needs to leave the apartment at move-out, the parties might simply decide to agree to the vague provision that the tenant needs to leave the apartment “clean.” The law and economics view explains this decision well: in most cases, the tenant leaves the place clean enough, and the parties will never have to haggle over the details upon move-out. Relational contracting theory also explains the vagueness well: the landlord doesn’t need to be too specific about cleanliness because the tenant relies on the landlord to give her a good reference for her next apartment rental.

But while existing explanations work well for simple, two-party contracts, and do some work in explaining sophisticated-party contracting, they fall short.12 12.In previous work, for example, I explored the puzzle of term sheets in M&A contracting. Term sheets—short, nonbinding precursors to a full-fledged M&A contract—are not contracts and are not legally binding or enforceable. Parties to term sheets do not operate in the tight-knit communities where informal sanctions are known to work. Nonetheless, once parties sign them, they behave as though bonded. Why do nonbinding term sheets have binding power? See Cathy Hwang, Deal Momentum, 65 UCLA L. Rev. 376, 380 (2018) (describing how deal lawyers use preliminary agreements in M&A deals); Cathy Hwang, Faux Contracts, 105 Va. L. Rev. 1025, 1056 (2019) [hereinafter, Hwang, Faux Contracts] (describing how M&A deals create small relational ecosystems in which both the contracting parties and their agents are incentivized to engage in consummate, rather than perfunctory, performance).Show More Certainly cost-benefit analysis and informal sanctions account for some contractual oddities—but not all. This Article offers a friendly addendum to those pathbreaking explanations: collaborative intent.

At its core, collaborative intent relies on a simple idea: businesses are not monoliths. They contain many divisions, departments, operational groups, and other constituencies. This idea is well-understood in the literature—even Ronald Coase’s seminal work on the boundary of the firm assumed that companies would contain multiple different groups within it.13 13.Ronald H. Coase, The Nature of the Firm, 16 Economica 386, 390 (1937) (posing and discussing the “boundaries of the firm” question: When should individuals be expected to form firms, and when should they be expected to cooperate through contract?).Show More Collaborative intent takes this idea a step further: it explicitly recognizes that each module within a company has its own purpose and, correspondingly, its own incentives, goals, limitations, and preferences. Internal constituencies often have a chance to veto—or at least weigh in on—both the substance and form of a proposed deal. By the time a company brings its intent to the negotiating table, that intent reflects the result of a consensus-building process within the company—in other words, the company brings what this Article calls its collaborative intent.

That collaborative intent in turn helps to account for many contractual oddities. Contracts that result from this kind of institutional collaboration are not necessarily rational, intentional, or carefully considered. Instead, they are amalgamations of many preferences within each deal party and result from the consensus-building process of getting the deal through a bureaucracy.

This Article provides a layered account of collaborative intent and its impact on deals and contracts, and proceeds as follows. Part I sets the stage. It shows how current contract theory does not account for the dealmaking process within firms. Part II presents the theory and evidence of collaborative intent. It uses two dozen original interviews with in-house dealmakers to show how the process of building consensus for a deal within the firm impacts contractual form and structure. Interview participants brought experience from a variety of industries, ranging from technology to hospitality to gaming, and uniformly reported that dealmaking within the firm is a collaborative exercise: it requires vote-whipping, pork-barreling, and balancing the needs of various constituencies into a coherent but multifaceted “intent.” Part III turns to implications. Existing literature overlooks the institutional details that impact contract design. Collaborative intent injects important and overlooked nuance and helps to build out a nuanced account of dealmaking that can help shape contract theory, enforcement, and design.

  1. Akorn, Inc. v. Fresenius Kabi AG, No. CV 2018-0300, 2018 WL 4719347 (Del. Ch. Oct. 1, 2018), aff’d, 198 A.3d 724 (Del. 2018). ↑
  2. Many major firms issued client alerts, immediately digesting the landmark case for their clients. See, e.g., David Leinwand, James E. Langston & Mark E. McDonald, Akorn v. Fresenius: A MAC in Delaware, Cleary Gottlieb Steen & Hamilton LLP (Oct. 11, 2018), https://www.clearymawatch.com/2018/10/akorn-v-fresenius-mac-delaware [https://perma.cc​/43KW-C54E]; Chris Gorman & Lisa Richards, Akorn v. Fresenius: Important Practical Lessons from First-Ever Material Adverse Effect, Fenwick & West LLP (Oct. 24, 2018), https://www.fenwick.com/publications/pages/akorn-v-fresenius-important-practical-lessons-from-first-ever-material-adverse-effect.aspx [https://perma.cc/9KPX-75MZ]; Peter A. Atkins & Edward B. Micheletti, ‘Reasonable Efforts’ Clauses in Delaware: One Size Fits All, Unless . . ., Skadden, Arps, Slate, Meagher & Flom LLP (Nov. 1, 2018), https://www.​skadden.com/insights/publications/2018/10/reasonable-efforts-clauses-in-delaware [https://p​erma.cc/JR7Z-FYAP]; Grant J. Esposito, David J. Fioccola & Robert W. May, Delaware Court of Chancery Finds a Material Adverse Event and Excuses Buyer from Obligation to Close in Akorn v. Fresenius Kabi AG, Morrison & Foerster LLP (Oct. 9, 2018), https://www.mofo.com/resources/insights/181009-delaware-material-adverse-event.html [htt​ps://perma.cc/FE72-NR7Q]. ↑
  3. Albert Choi & George Triantis, Strategic Vagueness in Contract Design: The Case of Corporate Acquisitions, 119 Yale L.J. 848, 854 (2010) [hereinafter Choi & Triantis, Strategic Vagueness] (defining a material adverse change clause in a contract as one that “permit[s] the buyer to avoid the closing of a deal if a material change has occurred in the financial condition, assets, liabilities, business, or operations of the target firm”). ↑
  4. Id. at 853 (noting that material adverse change clauses are vague, but “among the most heavily negotiated nonprice terms”). ↑
  5. See Scot Baker & Albert Choi, Contract’s Role in Relational Contract, 101 Va. L. Rev. 559, 565 (2015) (describing the common “best efforts” provisions as “a fault-based and open-ended standard”); Anthony J. Casey & Anthony Niblett, Self-Driving Contracts, 43 J. Corp. L. 1, 8 (2017) (“[Parties can choose to] use a vague standard that also requires a court to fill in the details after the fact. This could be a clause that requires something like ‘reasonable efforts,’ ‘best efforts,’ or ‘commercially reasonable efforts.’”); Victor P. Goldberg, In Search of Best Efforts: Reinterpreting Bloor v. Falstaff, 44 St. Louis L. Rev. 1465, 1465 (2000) (“When contracting parties cannot quite define their obligations, they often resort to placeholder language, like ‘best efforts.’”); Robert E. Scott, Contract Design and the Shading Problem, 99 Marq. L. Rev. 1, 20 (2015) (“[I]n the past fifty years, parties have increasingly inserted vague terms such as ‘best efforts,’ reasonable best efforts,’ or ‘commercially reasonable best efforts’ as modifiers that are combined with specific of precise performance obligations under the contract.”). The contracts law case Bloor v. Falstaff, 601 F.2d 609 (2d Cir. 1979), is another famous case about best efforts clauses. ↑
  6. In A. Gay Jenson Farms Co. v. Cargill, 309 N.W.2d 285 (Minn. 1981), the well-known agency law case, for example, large international conglomerate Cargill lent money to a small Minnesota grain elevator operator, in part on the condition that Cargill could conduct routine inspections of the grain elevator. The intrusive nature of the inspections became one of the reasons that the grain elevator operator’s other creditors later sued Cargill, arguing that the grain elevator operator was an agent of Cargill and that Cargill should be liable for the operator’s debts. Id. at 290–91. ↑
  7. Robert Malionek & Jon Weichselbaum, Five Keys to Analyzing a Material Adverse Effect, N.Y.L.J. (Mar. 6, 2019), https://www.lw.com/thoughtLeadership/five-keys-analyzing-materia​l-adverse-effect-ny-law-journal [https://perma.cc/TM95-FQKH] (noting that “[m]ateriality is both qualitative and quantitative” and that in M&A contracts, representations can be made “that reasonably would be expected to result in [a material adverse change]”). ↑
  8. See Oliver Hart, The Nobel Prize, https://www.nobelprize.org/prizes/economic-sciences/​2016/hart/facts/ [https://perma.cc/E6MG-HZY4] (last visited Nov. 10, 2021) (“In the mid-1980s, [Hart] contributed to the theory of incomplete contracts. . . . These analyses have been significant for, among other things, governance of companies and the design of laws and institutions.”); Oliver Hart & John Moore, Foundations of Incomplete Contracts, 66 Rev. Econ. Stud. 115 (1999) [hereinafter Hart & Moore, Foundations of Incomplete Contracts] (developing a model for the idea that contracts are incomplete); Oliver D. Hart, Incomplete Contracts and the Theory of the Firm, 4 J.L. Econ. & Org. 119 (1988); Oliver Hart, Dep’t of Econ., Harvard Univ., Incomplete Contracts and Control, Nobel Prize Lecture 372–73 (Dec. 8. 2016), https://www.nobelprize.org/uploads/2018/06/hart-lecture.pdf [https://perma.cc/7TK​E-49TD] [hereinafter Hart, Incomplete Contracts & Control] (noting that, although economists spent many decades working on questions involving complete contracts, “[a]ctual contracts are not like this, as lawyers have recognized for some time. They are poorly worded, ambiguous, and leave out important things. They are incomplete.”). ↑
  9. Choi & Triantis, Strategic Vagueness, supra note 3, at 852–53, 855 (arguing that parties can use vague contract provisions efficiently—for example, material adverse change clauses in acquisition agreements may remain vague because they are rarely litigated); Robert E. Scott & George G. Triantis, Anticipating Litigation in Contract Design, 115 Yale L.J. 814, 818–22 (2006) [hereinafter Scott & Triantis, Anticipating Litigation] (examining the efficiency of investment in the design and enforcement phases of the contracting process and arguing that parties can lower overall contracting costs by using vague contract terms ex ante and shifting investment to the ex post enforcement phase); Robert E. Scott & George G. Triantis, Incomplete Contracts and the Theory of Contract Design, 56 Case W. Res. L. Rev. 187, 195–96 (2005) (considering the role of litigation in motivating contract design). ↑
  10. See Ronald J. Gilson, Charles Sabel & Robert E. Scott, Braiding: The Interaction of Formal and Informal Contracting in Theory, Practice, and Doctrine, 110 Colum. L. Rev. 1377, 1398–99 (2010) [hereinafter Gilson et al., Braiding] (discussing the “rivalry” between formal and informal enforcement for contracts and noting that the two can substitute for each other or complement each other); see also Lisa Bernstein, Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry, 21 J. Legal Stud. 115, 121–24 (1992) [hereinafter Bernstein, Opting Out] (describing trade association enforcement of contractual breaches); Lisa Bernstein, Private Commercial Law in the Cotton Industry: Creating Cooperation Through Rules, Norms, and Institutions, 99 Mich. L. Rev. 1724, 1725 (2001) (describing the cotton industry’s alternative system of enforcement to the typical legal system). ↑
  11. Informal sanctions are particularly effective in small, tight-knit communities where parties have many points of contact. A robust literature has documented the role of norms and informal sanctions in a variety of interesting settings. See Robert C. Ellickson, Of Coase and Cattle: Dispute Resolution Among Neighbors in Shasta County, 38 Stan. L. Rev. 623, 628, 677 (1986) [hereinafter Ellickson, Of Coase and Cattle] (describing how rural cattle ranchers in Shasta County, California, abide by norms rather than rules and how animal trespass disputes are settled by self-help rather than formal legal enforcement mechanisms); Robert C. Ellickson, A Hypothesis of Wealth-Maximizing Norms: Evidence from the Whaling Industry, 5 J.L. Econ. & Org. 83, 84–85 (1989) (presenting evidence of informal enforcement—norms—overtaking formal enforcement in the whaling industry); Peter T. Leeson, An-arrgh-chy: The Law and Economics of Pirate Organization, 115 J. Pol. Econ. 1049, 1051 (2007) (describing the extralegal systems that pirates developed to provide checks on captain predation and to “create piratical law and order”); Bernstein, Opting Out, supra note 10, at 124 (describing how a diamond-merchant trade association in New York City helps to enforce contracts); Gillian K. Hadfield & Iva Bozovic, Scaffolding: Using Formal Contracts to Support Informal Relations in Support of Innovation, 2016 Wis. L. Rev. 981, 987, 1017 (describing the way in which commercial contracting parties across a variety of industries use a mix of formal and informal contracts to support their business relationships); Lisa Bernstein, Beyond Relational Contracts: Social Capital and Network Governance in Procurement Contracts, 7 J. Legal Analysis 561, 562 (2015) (describing how original equipment manufacturers in the Midwest have used a mix of formal contracts, relational contracts, and other tools to build and support their business relationships); Jonathan M. Barnett, Hollywood Deals: Soft Contracts for Hard Markets, 64 Duke L.J. 605, 607 (2015) (discussing the use of non-binding agreements—or “soft contracts”—in modern Hollywood filmmaking). ↑
  12. In previous work, for example, I explored the puzzle of term sheets in M&A contracting. Term sheets—short, nonbinding precursors to a full-fledged M&A contract—are not contracts and are not legally binding or enforceable. Parties to term sheets do not operate in the tight-knit communities where informal sanctions are known to work. Nonetheless, once parties sign them, they behave as though bonded. Why do nonbinding term sheets have binding power? See Cathy Hwang, Deal Momentum, 65 UCLA L. Rev. 376, 380 (2018) (describing how deal lawyers use preliminary agreements in M&A deals); Cathy Hwang, Faux Contracts, 105 Va. L. Rev. 1025, 1056 (2019) [hereinafter, Hwang, Faux Contracts] (describing how M&A deals create small relational ecosystems in which both the contracting parties and their agents are incentivized to engage in consummate, rather than perfunctory, performance). ↑

  13. Ronald H. Coase, The Nature of the Firm, 16 Economica 386, 390 (1937) (posing and discussing the “boundaries of the firm” question: When should individuals be expected to form firms, and when should they be expected to cooperate through contract?). ↑

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