Law Commons^™

Judicial Incorporation Of Trade Usages: A Functional Solution To The Opportunism Problem, Juliet P. Kostritsky

Faculty Publications

Article 2 of the UCC directed courts to look to business norms as a primary means of interpreting contracts. Recently the new formalists have attacked this strategy of norm incorporation as a misguided one that will lead inevitably to significant error costs. Accordingly, they have embraced plain meaning as the preferred interpretive strategy. This article argues that the strategy of rejecting trade usages unless they are part of the express contract is too rigid. The rejection is premised on an overly narrow cost/benefit analysis that fails to account for the functional role that such usages may play in curbing opportunistic …