Interpretation and Implied Terms in Contract Law
George M. Cohen
University of Virginia School of Law
September 15, 2009
Encyclopedia of Law and Economics, 2nd Edition, Forthcoming
Virginia Law and Economics Research Paper No. 2009-12
This essay will appear as an entry in the forthcoming Encyclopedia of Law and Economics (2d ed.), published by Edward Elgar. The essay surveys the law and economics literature on interpretation and implied terms in contract law, focusing on recent literature. In particular, the essay examines the economic arguments for textualism and contextualism, the two primary methodologies used by courts to determine the intentions of contracting parties with respect to their performance obligations. Topics discussed include complete and incomplete contracts; negotiating, drafting, and litigation costs; superior risk bearer and opportunism approaches; joint fault and multiple contingencies; contracting party characteristics; court competence and error; and agency costs and third party interests.
Number of Pages in PDF File: 25
Keywords: contracts, complete contracts, incomplete contracts, interpretation, implied terms, textualism, contextualism, superior risk bearer, opportunism, default rules, court competence, court error, litigation costsAccepted Paper Series
Date posted: September 18, 2009 ; Last revised: September 27, 2009
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