Regulating Optional Rules: About the Many Opportunities a Legislator Has

Abstract

In regulating contract law, the legislator has a plurality of choices. He is not confined to either prescribe a default from which the parties can unconditionally opt out or prohibit all alternative arrangements by a mandatory rule. Instead he can design the options created by a default rule in various ways. The most important ones are, first, opt-out conditions according to which an opt-out is accepted only in case certain conditions like keeping a written form are met. Second, contract law might demand one party to make an option offer to the other party. In this case the consumer or another weaker party can decide whether the contract shall follow the default rule or deviate from it. The consumer might have a financial incentive to opt out but is not required to follow it. Third, there is the opportunity of response rules which so far escaped academic attention. They leave the parties’ opt-out decision intact but modify or supplement them with additional rules. Unlike ordinary default rules they do not apply, unless the parties have made another choice, but only in case that they made a particular choice. Finally, the legislator can adapt opt-in rules. Their application depends on the parties’ choice. Unlike the rules that the parties choose as an alternative to the default they are unquestionably valid, due to their statutory status. The paper discusses and explores these options in order to show that mandatory rules are only means of last resort.