Standardized enforcement: Access to justice vs. contractual innovation

We model the effect of contract standardization on the development of markets andthe law. In a setting in which biased judges can distort contract enforcement, we findthat the introduction of a standard contract reduces enforcement distortions relative toreliance on precedents, exerting two effects: i) it statically expands the volume of trade,but ii) it crowds out the use of open-ended contracts, hindering legal evolution. We shedlight on the large-scale commercial codification undertaken in the nineteenth centuryin many countries (even common-law ones) during a period of booming commerce andlong-distance trade.