Abstract

http://ssrn.com/abstract=1349365
 
 

Citations (1)



 
 

Footnotes (91)



 


 



Rational Ignorance, Rational Closed-Mindedness, and Modern Economic Formalism in Contract Law


Shawn J. Bayern


Florida State University - College of Law

July 1, 2009

California Law Review, Vol. 97, p. 943, 2009
FSU College of Law, Public Law Research Paper No. 345
FSU College of Law, Law, Business & Economics Paper No. 09-04

Abstract:     
This article identifies modern economic formalism in contract law as little more than an incorrect argument for rational ignorance in courts. Distinct from other varieties of contract formalism, modern economic formalism rests on the notion that information beyond the text of contracts is a valuable interpretive aid -- but not valuable enough to justify its costs, at least for rational, risk-neutral parties.

In this article, I challenge the leading argument for this kind of formalism, made by Alan Schwartz and Bob Scott. Most fundamentally, Schwartz and Scott's noted argument conflates probability with uncertainty, and as a result is fundamentally circular. Their argument also draws untenable distinctions between gap-filling and interpretation, and it fails to recognize that under the strong assumptions it adopts, contracting parties would be unlikely to litigate disputes in the first place.

Number of Pages in PDF File: 37

Keywords: contracts, interpretation, formalism, rational ignorance, law and economics

JEL Classification: K12

Accepted Paper Series





Download This Paper

Date posted: February 25, 2009 ; Last revised: November 3, 2009

Suggested Citation

Bayern, Shawn J., Rational Ignorance, Rational Closed-Mindedness, and Modern Economic Formalism in Contract Law (July 1, 2009). California Law Review, Vol. 97, p. 943, 2009; FSU College of Law, Public Law Research Paper No. 345; FSU College of Law, Law, Business & Economics Paper No. 09-04. Available at SSRN: http://ssrn.com/abstract=1349365

Contact Information

Shawn J. Bayern (Contact Author)
Florida State University - College of Law ( email )
425 W. Jefferson Street
Tallahassee, FL 32306
United States
Feedback to SSRN


Paper statistics
Abstract Views: 1,457
Downloads: 438
Download Rank: 37,117
Citations:  1
Footnotes:  91
Paper comments
No comments have been made on this paper

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.282 seconds