Are contract terms priced? We ask this question in the context of the Euro CAC initiative which prescribes newly issued sovereign bonds of Eurozone countries to include Collective Action Clauses (CACs) starting from January 1, 2013. We find the following: First, the markets appear to price the new contract term, i.e., bonds with CACs trade at lower yields relative to bonds that do not include CACs. Second, the quality of the legal system matters to whether, and how, markets price these contract terms: The better the legal system, the larger is the yield reduction associated with CACs. Third, the introduction of mandatory CACs has not increased the overall cost of Euro area sovereign funding: CACs are useful for an ordered restructuring, but do not make restructurings more likely.