ABSTRACT
Business and commercial statutes are composed almost entirely of default rules, which parties may override via agreement or adopt via silence. Drafters of these statutes, and theories about the substance of default rules, assume that parties indeed adopt statutory default rules via silence.
Against this backdrop, this article examines unexpected behavior by parties to business and commercial agreements: parties often restate statutory default rules in their agreements rather than adopting those rules via silence. Based on a review of actual limited partnership agreements and security agreements, this article identifies five unique species of restatement – bald, tweak, refill, baseline, and context restatements – and provides examples of each.
This article considers the implications of this unexpected behavior. First, this article analyzes the strategic reasons that parties restate statutory defaults in their business and commercial agreements rather than adopting those rules via silence. Second, this article argues that a restated statutory default should be interpreted identically to the restated statute, contrary to the Delaware Supreme Court’s holding in Murfey v WHC Ventures, LLC, 236 A 3d 337 (Del 2020). Finally, this article considers how the theories of statutory defaults should be adapted in recognition of the strategic reasons that parties restate statutory defaults in their agreements.
Couture, Wendy Gerwick, Strategically Restated Defaults (March 12, 2024) forthcoming 16 William & Mary Business Law Review.
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