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Contract Lore As Heuristic Starting Points, Colin P. Marks

Faculty Articles

What Professor Hillman labels as lore are better thought of as a series of heuristic starting points. I do not label them heuristics in and of themselves as they do not represent shortcuts to the ultimate answer. But, as I explain, all of the areas that Professor Hillman identifies as lore are actually quite nuanced, sometimes filled with exceptions; other times, they simply represent the first step in a long inquiry. Heuristics as a teaching device has been recognized in law and other disciplines as an effective tool in not only conveying information, but also prodding the student to conduct …

Contract Interpretation And The Parol Evidence Rule: Toward Conceptual Clarification, Joshua M. Silverstein

Faculty Scholarship

Contract interpretation is one of the most important topics in commercial law. Unfortunately, the law of interpretation is extraordinarily convoluted. In essentially every American state, the jurisprudence is riddled with inconsistency and ambiguity. This causes multiple problems. Contracting parties are forced to expend additional resources when negotiating and drafting agreements. Disputes over contractual meaning are more likely to end up in litigation. And courts make a greater number of errors in the interpretive process. Together, these impacts result in significant unfairness and undermine economic efficiency. Efforts to remedy the doctrinal incoherence are thus warranted.

The goal of this Article is …

The Case Against Equity In American Contract Law, Jody S. Kraus, Robert E. Scott

Faculty Scholarship

The American common law of contracts appears to direct courts to decide contract disputes by considering two opposing points of view: the ex ante perspective of the parties’ intent at the time of formation, and the ex post perspective of justice and fairness to the parties at the time of adjudication. Despite the black letter authority for both perspectives, the ex post perspective cannot withstand scrutiny. Contract doctrines taking the ex post perspective – such as the penalty, just compensation, and forfeiture doctrines – were created by equity in the early common law to police against abuses of the then …

Using The West Key Number System As A Data Collection And Coding Device For Empirical Legal Scholarship: Demonstrating The Method Via A Study Of Contract Interpretation, Joshua M. Silverstein

Faculty Scholarship

Empirical research is an increasingly important type of legal scholarship. Such research generally requires the collection and coding of large quantities of data. These tasks pose critical challenges for legal scholars. Most crucially, they are often resource-intensive. The primary purpose of this article is to explain how researchers can use the West Key Number System to dramatically streamline the process of data collection and coding. The article accomplishes this, in part, through a demonstration: it employs the Key Number System to conduct an empirical study of contract interpretation.

Contract interpretation is one of the most significant areas of commercial law. …

Contract Resurrected! Contract Formation: Common Law – Ucc – Cisg, Sarah Howard Jenkins

Faculty Scholarship

No abstract provided.

Contract Design And The Shading Problem, Robert E. Scott

Faculty Scholarship

Despite recent advances in our understanding of contracting behavior, economic contract theory has yet to identify the principal causes and effects of contract breach. In this Essay, I argue that opportunism is a primary explanation for why commercial parties deliberately breach their contracts. I develop a novel variation on opportunism that I identify as “shading;” a behavior that more accurately describes the vexing problems courts face in rooting out strategic behavior in contract litigation. I provide some empirical support for the claim that shading behavior is both pervasive in litigation over contract breach and extremely difficult for generalist courts to …

Summary Of Century Sur. Co. V. Casino W., Inc., 130 Adv. Nev. Op. 42, Michael Paretti

Nevada Supreme Court Summaries

The court determined whether two distinct provisions of an insurance policy regarding air pollution were subject to multiple reasonable interpretations.

Text And Context: Contract Interpretation As Contract Design, Ronald J. Gilson, Charles F. Sabel, Robert E. Scott

Faculty Scholarship

Contract interpretation remains the most important source of commercial litigation and the most contentious area of contemporary contract doctrine and scholarship. Two polar positions have competed for dominance in contract interpretation. In a textualist regime, generalist courts cannot consider context; in a contextualist regime, they must. Underlying this dispute are contrary assumptions about the prototypical contract each interpretive style addresses. For modern textualists, contracts are bespoke, between legally sophisticated parties who embed as much or as little of the contractual context as they wish in an integrated writing and prefer to protect their choices against judicial interference by an interpretive …

Parallel Contract, Aditi Bagchi

All Faculty Scholarship

This Article describes a new model of contract. In parallel contract, one party enters into a series of contracts with many similarly situated individuals on background terms that are presumptively identical. Parallel contracts depart from the classical model of contract in two fundamental ways. First, obligations are not robustly dyadic in that they are neither tailored to the two parties to a given agreement nor understood by those parties by way of communications with each other. Second, obligations are not fixed at a discrete moment of contract. Parallel contracts should be interpreted differently than agreements more consistent with the classic …

The Promise Principle And Contract Interpretation: A Suggested Approach For Maximizing Value, Juliet P. Kostritsky

Faculty Publications

The promise principle and its roots in a certain type of morality of individual obligation, which play the central role in Charles Fried’s vision of Contract law, have importantly contributed to rescuing Contract law from absorption into Tort law and from the imposition of externally imposed standards that are collective in origin. It makes a mammoth contribution to alerting us to the tyranny of interference with individual self-determination. However, this essay questions whether a promise centered system derived from a moral philosophy of promising (without an observable and testable foundation in reality) and geared to internal individual obligation and duty …

Plain Meaning Vs. Broad Interpretation: How The Risk Of Opportunism Defeats A Unitary Default Rule For Interpretation, Juliet P. Kostritsky

Faculty Publications

The problem of contract interpretation presents courts with significant questions about the nature and methodology of judicial intervention into privately arranged affairs. The court often assumes an active role in interpreting the words of a written contract in part because words have more than one meaning or because a contract is incomplete. When a court chooses amongst variable meanings, or interprets contracts to craft limitations on parties' behavior when express limits do not exist, its choice must be then justified using a framework explored in this essay.

Traditionally, commentators have advocated one of two general approaches to supply the methodology …

'Agreeing To Disagree': Filling Gaps In Deliberately Incomplete Contracts, Omri Ben-Shahar

Articles

Incomplete contracts have always been viewed as raising the following challenge for contract law: does the incompleteness-or, "indefiniteness," as it is usually called-rise to such a level that renders the agreement legally unenforceable? When the indefiniteness concerns important terms, it is presumed that the parties have not reached an agreement to which they intend to be bound. This "fundamental policy" is the upshot of the view that "contracts should be made by the parties, not by the courts."' When, in contrast, the indefiniteness concerns less important terms, courts supplement the agreement with gap fillers and enforce the supplemented contract.

The Relative Costs Of Incorporating Trade Usage Into Domestic Versus International Sales Contracts: Comments On Clayton Gillette, Institutional Design And International Usages Under The Cisg, Avery W. Katz

Faculty Scholarship

Clayton Gillette's paper on the use of trade usage in reported disputes arising under the United Nations Convention on Contracts for the International Sale of Goods ("CISG") presents a challenge to recent scholarly critiques of modern contractual interpretation. As Gillette explains, much recent writing by economically influenced US scholars in contracts and commercial law has argued in favor of more formalistic methods of interpretation, and against the overwhelming trend of the last half of the twentieth century: a trend toward a more contextual interpretative approach that takes into account a variety of evidence, including the business purpose of the transaction, …

The Economics Of Form And Substance In Contract Interpretation, Avery W. Katz

Faculty Scholarship

For over a century, legal commentators have debated the relative merits of formal and substantive approaches to the interpretation of contracts; in recent years, the debate has increasingly been conducted in the language of the economic approach to contract law. While this new wave of scholarship has been relatively successful in relating the traditional debates over formalism to specific transactional and institutional problems such as imperfect information, it has been less productive in terms of generating useful legal or policy recommendations. This Essay proposes a different approach: one that focuses on private rather than public legal decisionmakers as its primary …

Contract Lore, Robert A. Hillman

Cornell Law Faculty Publications

No abstract provided.

Contract Lore, Robert A. Hillman

Cornell Law Faculty Publications

The article investigates why contracts lawyers, judges, and theorists ("contracts people") routinely and confidently invoke "traditional beliefs" about contract law that are not even close to true. For example, contracts people often declare that the purpose of expectancy damages is to put the injured party in as good a position as if the contract had been performed. But expectancy damages virtually never do this. Contracts people also recite that the reasons for breach, whether willful, negligent or unavoidable, do not matter, and that formation and interpretation issues focus on the parties' intentions. Neither of these assertions is close to true …

Default Rules In Sales And The Myth Of Contracting Out, James J. White

Articles

In this article, I trace the dispute in the courts and before the ALI and NCCUSL over the proper contract formation and interpretation default rules. In Part II, I consider the Gateway litigation. In Part III, I deal with UCITA and the revision to Article 2. In Part IV, I consider the merits of the competing default rules.

Good Faith And The Cooperative Antagonist (Symposium On Revised Article 1 And Proposed Revised Article 2 Of The Uniform Commercial Code), James J. White

Articles

One of Karl Llewellyn's most noted achievements in the Uniform Commercial Code was to impose the duty of good faith on every obligation under the Uniform Commercial Code.1 Some (I am one) have privately thought that imposition of this unmeasurable, undefinable duty was Llewellyn's cruelest trick, but no court, nor any academic writer, has ever been so bold or so gauche as to suggest that good faith should not attend the obligations of parties under the UCC. Notwithstanding this silent indorsement of the duty of good faith, the courts2 and commentators3 have had difficulty in determining what is and what …

Autistic Contracts (Symposium), James J. White

Articles

In this paper I address the question whether the law should affirm the offeror's inference and should bind the offeree to the terms proposed by the offeror even in circumstances where the offeree may not intend to accept those terms and where an objective observer might not draw the inference of agreement from the offeree's act. Modem practice and current proposals concerning contract formation in Revised Article 2 and in the Uniform Computer Information Transactions Act (nee Article 2B) press these issues on us more forcefully than old practices and different law did. 1 But contractual autism is not new; …

Presidential Address: Contract Reading Revisited, Theodore J. St. Antoine

Book Chapters

A quarter century ago, in a presentation at the Academy’s annual meeting, I used the phrase “contract reader” to characterize the role an arbitrator plays in construing a collective bargaining agreement. That two-word phrase may be the only thing I ever said before this body which has been remembered. Unfortunately, it is almost invariably misunderstood. Time and again members have reproached me: “What’s the big deal about contract reading, anyway? Isn’t it just the same as contract interpretation?” Or, more substantively scathing: “Do you really think, Ted, that all you have to do to interpret a labor agreement is to …

The Tentative Case Against Flexibility In Commercial Law, Omri Ben-Shahar

Articles

Well-rooted in modern commercial law is the idea that the law and the obligations that it enforces should reflect the empirical reality of the relationship between the contracting parties. The Uniform Commercial Code ("Code") champions this tradition by viewing the performance practices formed among the parties throughout their interaction as a primary source for interpreting and supplementing their explicit contracts. The generous recognition of waiver and modifications, as well as the binding force the Code accords to course of performance, course of dealings, and customary trade usages, effectively permits unwritten commercial practices to vary and to erode explicit contractual provisions.

Interpretation Of Contemporary Commercial Agreement A Comparative Study, Qing Cai

LLM Theses and Essays

Many disputes arising under commercial agreements turn upon the interpretation of the agreement. Interpretation is the process by which a court ascertain in meaning that it will give to the language used by the parties in determining the legal effect of an existing agreement. It also involves questions as to whether additional duties or excuses will be implied. In addition, interpretation can be relevant to contract formation since courts may be forced to determine the meaning of communication used by the parties before they determine whether the parties have reached an agreement. To some extent, how the judges interpret the …

Contract Interpretation Under The Uniform Commercial Code (Ucc Ni Okeru Keiyaku No Kaishaku), Whitmore Gray

Articles

A series of seminar lectures given by Whitmore Gray in Tokyo, Japan during October 1968. Six articles were subsequently published in “Kaigai Shojihomu” (The International Business Law Bulletin) between July 1969 and May 1970.

The fourth installment discusses further considerations and principles that impact contract interpretation.

Contract Interpretation And The Uniform Commercial Code (Ucc Ni Okeru Keiyaku No Kaishaku), Whitmore Gray

Articles

A series of seminar lectures given by Whitmore Gray in Tokyo, Japan during October 1968. Six articles were subsequently published in “Kaigai Shojihomu” (The International Business Law Bulletin) between July 1969 and May 1970. The third installment introduces the basic principles of contract interpretation.

Effect Of An Agreement By One Person To Supply Another's 'Requirements' Of A Given Commodity, Grover C. Grismore

Articles

The cases show that the kind of agreement indicated by the heading of this note has become an established part of business usage. In normal times such an agreement is likely to be carried out to the entire satisfaction of both parties, without question, but, in a period of changing business conditions and abnormal price flctuations such as we have witnessed during the last few years, nice questions of interpretation are likely to arise, as is well illustrated by the recent case of Oscar Schlegel Mfg. Co. v. Peter Coopers Glue Factory, (1920) 179 N. Y. S. 271.