Law Commons^™

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 …

The Fatal Leviathan: A Hayekian Perspective Of Lex Mercatoria In Civil Law Countries, Fabio Núñez Del Prado Ch.

Pace International Law Review

Who should create default commercial rules? Should they be created in a constructivist way or should they be created rather through a spontaneous order? Should Kelsen’s positivism prevail in commercial law? Drawing on diverse libertarian literature, I will argue that, since courts do not play a dominant role in civil law countries and, more importantly, do not set precedents, default commercial rules should not be created by the legislator, but through the Lex Mercatoria.

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 …

The Use And Abuse Of Precedent In Labor And Employment Arbitration, Theodore J. St. Antoine

Articles

As he did so often with legal problems, Oliver Wendell Holmes put his finger on the key to the problem of precedent with a memorable assertion. Said he: "It is revolting to have no better reason for a rule of law than that so it was laid down in the time of Henry IV." Notice that Holmes did not say it is a bad thing for a rule to have an ancient lineage. The question is whether the rule that may have made sense when Henry IV reigned, or when the Wagner Act was passed, has stood the test of …

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.

Say What? The Resolution Of Ambiguous Written Agreements In West Virginia, James Matthew Davis

West Virginia Law Review

No abstract provided.

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 …

Indiana Jones, Contracts Originalist, W. Mark C. Weidemaier

W. Mark C. Weidemaier

Public Lands And The Federal Government’S Compact-Based “Duty To Dispose”: A Case Study Of Utah’S H.B. 148 – The Transfer Of Public Lands Act, Donald J. Kochan

Donald J. Kochan

Recent legislation passed in March 2012 in the State of Utah — the “Transfer of Public Lands Act and Related Study,” (“TPLA”) also commonly referred to as House Bill 148 (“H.B. 148”) — has demanded that the federal government, by December 31, 2014, “extinguish title” to certain public lands that the federal government currently holds (totaling an estimated more than 20 million acres). It also calls for the transfer of such acreage to the State and establishes procedures for the development of a management regime for this increased state portfolio of land holdings resulting from the transfer. The State of …

Hypothetical Efficiency Is Not Grounds For Breach, Daniel M. Isaacs

West Virginia Law Review

The law does not approve of the efficient breach of contract; it merely provides or fails to provide remedies. Although there are situations where the law implies contract terms, there is no basis for an implied covenant of efficiency. Hypothetical contracts, purporting to incorporate a release where the cost of performance to the promisor exceeds its value to the promisee, cannot be used to bind people to results, even efficient ones, to which they did not agree. Where it is inefficient to demand performance, flexibility should come from the promisee who, having received in trust the power to limit the …

Contract Hope And Sovereign Redemption, Anna Gelpern

Georgetown Law Faculty Publications and Other Works

Sovereign immunity has served as a partial substitute for bankruptcy protection, but it has encouraged a minority of creditors to pursue unorthodox legal remedies with spillover effects far beyond the debtor-creditor relationship. The attempt to enforce Argentina’s pari passu clause in New York is an example of such a remedy, which relies primarily on collateral damage to other creditors and market infrastructure to obtain settlement from a debtor that would not pay. The District Court decision, now on appeal before the Second Circuit, may not make holding out more attractive in future restructurings – but it would make participation less …

Vol. 3 No. 2, Spring 2012; Illinois Supreme Court: Overturn Thompson V. Gordon And Protect Design Professionals From Unbargained-For, Extra-Contractual Obligations, Daniel Nunney

Northern Illinois Law Review Supplement

This Note addresses how Illinois courts conduct contract interpretation and define the scope of contractual duties for design professionals. It discusses how the appellate court in Thompson v. Gordon improperly interpreted the contract in question, and how the court incorrectly followed applicable Illinois precedent when defining the scope of contractual duties for an engineer. It addresses the short- and long-term practical impacts of the Thompson decision, and also addresses a number of policy considerations associated with the majority's ruling. In sum, this Note advocates that it was necessary for the Illinois Supreme Court to overturn the Thompson decision.

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 …

Reference Points And Contract Interpretation: An Empirical Examination, Doron Teichman

Doron Teichman

This Article focuses on the influence of framing on contract-interpretation decisions. A large body of both psychological and economic studies suggests that people treat payoffs framed as gains and payoffs framed as losses distinctly. Building on these studies, we hypothesize that contract interpretation decisions will be affected by the way in which they are framed. More specifically, we expect that promisors will tend to adopt a more self-serving interpretation when they are making decisions in the domain of losses. To test this prediction, we run a series of three experiments that are all based on a between-subject design. The first …

The Public Meaning Rule: Reconciling Meaning, Intent, And Contract Interpretation, Aaron D. Goldstein

Aaron D Goldstein

Courts generally follow one of two problematic rules governing the admission of extrinsic evidence to interpret a contract. The plain meaning rule ties the interpretation of contract terms to a judge’s subjective notions of what words mean and prevents parties from submitting evidence of alternate meanings that are publically used and acknowledged. The context rule looks to evidence of the parties’ subjective intent rather than the shared and public meaning of terms, and in doing so, undermines the predictability creating function of contracts.

This article proposes a third rule—the public meaning rule—which admits extrinsic evidence only of the public and …

Is The Delaware Court Of Chancery Going “Objective” On Us? Or Policemen’S Annuity And Benefit Fund Of Chicago V. Dv Realty Advisors Llc: More Delaware Permutations On Good Faith, Daniel S. Kleinberger

Faculty Scholarship

The Chancery Court’s opinion in Policemen’s Annuity and Benefit Fund of Chicago v. DV Realty Advisors LLC, C.A. No. 7204-VCN, 2012 WL 3548206 (Del. Ch. Aug. 16, 2012) is thought provoking for at least two reasons. The first is somewhat technical and concerns the relationship between a partnership agreement’s reference to “good faith” and the implied covenant of good faith. The second concerns what appears to be yet another Delaware permutation on the meaning of “good faith.”

Due to the opinion’s treatment of the covenant, it seems possible (though hardly desirable) for two different standards of good faith to apply …

Untangling Jurisdiction And Contract Scope Issues Within Intellectual Property Licenses, Brandon Beam

University of Arkansas at Little Rock Law Review

Copyright license cases pose difficult issues regarding the mixture of federal copyright law and state contract law for courts and commentators alike. Specifically, a split exists over which cases "arise under" federal copyright law. This complication is compounded by the difficulty in predicting federal preemption of state contract law.

In an effort to stabilize these complications, this comment recommends an approach of split sovereignty that would empower different systems to control the areas they are designated to regulate. In particular, the author suggests that procedural issues in copyright license cases should be clarified by (1) governing exclusive federal jurisdiction under …

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 …

Sifre V. Sifre, Victoria Rosner

NYLS Law Review

No abstract provided.

A Consequential Approach To Interpretation And Interpretive Risk: Rethinking Judicial Intervention From Contracts To The Chrysler Bankruptcy, J. P. Kostritsky

Juliet P Kostritsky

Abstract When contracts remain ambiguous or incomplete, courts and scholars must confront the inevitable question of when intervention in private contracts is justified. To deal with the unresolution or residual uncertainty, the Austrian economists and the new textualists suggest that any intervention would be a fool’s errand. Their position amounts to an unvarying posture that any party asking for an additional term or a broad interpretation will always lose. Recognizing that there is an interpretive risk in all contracts, the court should adopt an interpretive methodology that parties would be willing to adopt and that would enhance the willingness of …

A Consequential Approach To Interpretation And Interpretive Risk: Rethinking Judicial Intervention From Contracts To The Chrysler Bankruptcy, Juliet P. Kostritsky

Juliet P Kostritsky

Abstract When contracts remain ambiguous or incomplete, courts and scholars must confront the inevitable question of when intervention in private contracts is justified. To deal with the unresolution or residual uncertainty, the Austrian economists and the new textualists suggest that any intervention would be a fool’s errand. Their position amounts to an unvarying posture that any party asking for an additional term or a broad interpretation will always lose. Recognizing that there is an interpretive risk in all contracts, the court should adopt an interpretive methodology that parties would be willing to adopt and that would enhance the willingness of …

Policy Considerations In Contract Interpretation: The Contra Proferentem Rule From A Comparative Law And Economics Perspective, Péter Cserne

Péter Cserne

Deviations from the common intentions of the parties in contract interpretation is sometimes attributed to “an appetite for benefiting whichever of the parties is perceived to be in a weaker bargaining position”. In this paper I argue that there is more reasonable explanation (justification) for at least some of these deviations. The contra proferentem doctrine is an information-forcing rule that can promote optimal completeness and clarity in contracts. Whether the contract is standardized or not, other things being the same, the risk of ambiguity in contractual language should be borne by the party who could more cheaply avoid it, and …

The Means/Ends Dilemma In Contract Interpretation: A Response To Professors Kraus And Scott: How The Intractability Of Express Language And Uncertainty Affects Legal Interventions In Contracts, Juliet P. Kostritsky

Juliet P Kostritsky

In their recent article on Contract Design and Intent, Professors Jody Kraus and Robert Scott offer a new justification for such a literal enforcement of the parties’ chosen terms and for ignoring contractual objectives. Their argument depends on a theory of how parties bargain and trade off front end and back end costs. Kraus and Scott posit that if parties have invested enough transaction costs to result in specific terms, and failed to delegate decision-making to a court through open-ended terms, they have a deliberately chosen to exclude courts. In such cases courts should rigorously adhere to the explicit contractual …

, Mary Ellen Coster Williams

American University Law Review

No abstract provided.

Is A Burrito A Sandwich? Exploring Race, Class, And Culture In Contracts, Marjorie Florestal

Michigan Journal of Race and Law

A superior court in Worcester, Massachusetts, recently determined that a burrito is not a sandwich. Surprisingly, the decision sparked a firestorm of media attention. Worcester, Massachusetts, is hardly the pinnacle of the culinary arts-so why all the interest in the musings of one lone judge on the nature of burritos and sandwiches? Closer inspection revealed the allure of this otherwise peculiar case: Potentially thousands of dollars turned on the interpretation of a single word in a single clause of a commercial contract. Judge Locke based his decision on "common sense" and a single definition of sandwich-"two thin pieces of bread, …

Interpretation, Francis J. Mootz Iii

Scholarly Works

In this chapter from "Law and the Humanities: An Introduction," published by Cambridge University Press, I first survey various theoretical approaches to interpretation, including natural law, analytical legal positivism, law as communication (originalism, intentionalism, and new textualism), and the hermeneutical turn. I then discuss the role of interpretation in contract law, statutory law and constitutional law, to situate the theories in practice.