Contracts Without Law: Sovereign Versus Corporate Debt

Document Type



The most up-to-date version of this piece can be found in the Duke Law Scholarship


Although extralegal enforcement is widely acknowledged, the conventional understanding of written contract provisions, such as the complex and detailed provisions in bond contracts, is that they are drafted to be enforced by law. This framing neglects the value of contracts in shaping extralegal forces, particularly where litigation is unlikely or not possible. Sovereign debt contracts provide an example in which lengthy and detailed contracts play a key role even though the debtor is largely litigation-proof. We examine how contract provisions in sovereign debt contracts improve the efficiency of creditor control outside the realm of legal enforcement.

Date of Authorship for this Version

March 2007