Risk-Averse Contract Interpretation

By Bagchi, Aditi | Law and Contemporary Problems, Fall 2019 | Go to article overview

Risk-Averse Contract Interpretation


Bagchi, Aditi, Law and Contemporary Problems


I

INTRODUCTION

What kind of contract is boilerplate? Is it typical--because it literally describes most actual contracts? Is it anomalous--because it departs from standard ideas about contract formation, which apply to most other contracts? Is it not contract at all--because it lacks meaningful assent on one side? How courts should deal with boilerplate seems to turn on these prior questions regarding its basic character: If it is not contractual at all, then it should not be enforceable. If it is normal contract, then it requires no special treatment. If it is anomalous, though legitimate and enforceable, it would call for its own interpretive regime.

It turns out, though, that how we interpret boilerplate has repercussions for what it is, or how we conceive its legal status. That is, only if our interpretive methodology makes good sense of boilerplate--if it renders boilerplate the recognizable product of the kind of consent we are looking for in contract, and delivers outcomes that serve autonomy and efficiently govern transactions--only then can we justify applying the apparatus of contract to boilerplate and thereby accept it as the means by which the terms of innumerable transactions are set.

In this Article, I argue that boilerplate is properly regarded as normal contract. We can treat it "normally" for two reasons. First, contract interpretation should always take into account factors that scholars deem especially important in the context of boilerplate. Thus, if we understand general contract interpretation in that way, boilerplate does not require its own interpretive regime. More specifically, boilerplate only functions if we take into account the standard market terms that it ordinarily accompanies. I argue, however, that courts should always take standard market terms into account as a benchmark for interpreting ambiguous contract language. More generally, contract interpretation should always incorporate external references of reasonable meaning. Properly applied, such an externally-sensitive methodology would operate to account for third-party effects of boilerplate interpretation without requiring a specialized procedure.

The second grounds for treating boilerplate normally is that some kinds of contextual considerations regarding the process of formation are self-effacing with respect to boilerplate. Because it is appropriate for courts to take into account communications between the parties regarding ambiguous contract terms when interpreting those terms, we might worry that courts will assign meaning to meaningless variation among boilerplate or retroactively imbue communications between contracting parties with significance they did not have. But the general rule works fine for boilerplate as long as courts recognize boilerplate as such. That is, if a given text is standardized, that just means that the parties did not in fact negotiate the language of that term and that evidence pertaining to their negotiations is therefore not relevant to its meaning. This news is not hard to swallow for courts that understand contract as no less than the product of markets than the work product of attorneys.

The interpretive method recommended here is normative triangulation, under which courts interpret ambiguous contract terms in light of the parties' background duties. (1) Normative triangulation seems at first blush orthogonal to standard postures in the debate on contract interpretation. The primary debate is between formalism and contextualism, and the contested question is how much inquiry courts should make into the circumstances of contract. Formalists would defer to party choice, and at least sharply limit judicial inquiry into facts outside the text of an agreement where it records a transaction between sophisticated parties. (2) Contextualists would have courts more easily incorporate a variety of contextual considerations, including communications between the parties, their prior course of dealing, course of performance, and trade usage. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Risk-Averse Contract Interpretation
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.