Comments on <span class="hide">Student Blogger - </span><span class="studentTitle">Contracts as Reference Points</span> In a recent article (Contracts as Reference Points), Professors Oliver Hart and John Moore argue that parties use contracts as a reference point for their expectations of others’ behavior. Since a party agreed to the contract—perhaps through a competitive bidding process—they will not be aggrieved when their counterparty fulfills the terms of the contract. That is exactly how the party expected the counterparty to behave. But not all contracts completely specify the obligations of the parties. Some terms of a contract are flexible, such as the exact employment tasks, or the specific quality of a product being purchased. When a term in a contract is not specific, it allows for one party to deviate and still meet the obligations of the contract. If a party sees their counterparty deviating, the party may become aggrieved and feel cheated. This may cause the aggrieved party to “shade”—or not adequately perform their part of the bargain—as a means of retaliation. Thus, parties may choose to adopt rigid contracts to avoid potential shaving. Hart tested the prediction that parties may prefer rigid contracts in a recent empirical paper that was presented at the Law and Economics Workshop. . . . TypePad 2009-05-06T20:37:58Z UChicagoLaw,2003: