Nonlegal enforcement systems come in many varieties. The ordinary rules of everyday conduct are enforced by the gossip of neighbors and scolding of friends; while, at the other extreme of complexity, investors may comply with intricate financial arrangements mainly to preserve their market reputation, rather than from fear of lawsuit. The need for further typology is evident. The Japanese products liability system and the transactional rules of the American grain industry-carefully described in the articles before us'-represent two variants of a particular type of nonlegal governance regime-a type in which the parties devise a fairly comprehensive system that includes written rules of conduct, sanctions, and procedures for enforcement. These systems are established in a two-step process: first, norms evolve as a result of transactors' dealings (as in the grain industry) or industry consensus (standards identifying design defects); second, the centralized agency selects among, codifies, and enforces these norms. The substantive rules of conduct applicable to transactions are formulated in part by courts and legislators, in part by nonlegal decisionmakers-trade organizations, independent standard setters, arbitrators. Correlatively, the sanctions imposed for violation of the rules are at first cut nonlegal-expulsion from the trade association or revocation of the license to use a trade emblem. In the background, courts stand ready to enforce the damages stipulated by lawexpectation damages for breach of contract and full compensation for injuries suffered in tort. In these settings, then, the nonlegal systems both displace in part, yet rest upon, the extant legal regime. The systems represent attempts to modify the background law-the products liability regime as applied to consumer products and Article 2 of the Uniform Commercial Code (UCC) for sales of grain. At the same