The Bewitchment of Intelligence: Language and Ex Post Illusions of Intention

Abstract:     
Lawyers who negotiate and litigate over complex deals have an intuitive notion of the value of what they do in connection with the contract. The arguments around technical contract language often are a lawyers' game; in most cases, what is clear would have been clear on a handshake; and what is tightly negotiated bears only a random relationship to the areas of future dispute. If they happen to have drafted tight and clear language around the particular matter in dispute, it is as much luck as foresight. Thereafter complex agreements can have binding effect for years, but most of the relationship transpires without explicit reference to the contract. The problem to which much of contract interpretation scholarship is directed arises only when there is a significant disagreement not resolvable by non-legal means. If the contract is not sufficiently clear on the subject so the parties agree on the outcome, or a court has an easy case, how do courts go about filling gaps that the parties simply did not address, or providing meaning in the present circumstance to words that do not unambiguously resolve the problem?

I want to suggest an answer I believe is intuitive to practitioners but may be provocative in the academy. The search for an illusive ex ante mutually intended meaning is a waste of time, as is worry about the ancillary problem of opportunism. The creation of the complex contract and its later interpretation in a difficult case of ambiguity are distinct events. If a previously negotiated term that is capable of being ambiguous nevertheless has a mutually understood meaning, it will be apparent at the time of the potential dispute, but in that instance there will be no dispute and no jurisprudence. If there truly is a dispute, however, there is no going back to a mutually intended meaning as of the time the contract was made, because the words only take on meaning at the time of their application to the circumstance. It follows that opportunism is a function of extra-legal morals and norms, and is not controllable by language that turns out to be disputable, if the parties choose to dispute it. The proper focus of courts, therefore, is a pragmatic resolution of disputes, and not a search for mutual intention.

Keywords: Contract, opportunism, intention, Wittgenstein, rule-induction, rule-skepticism, rule-following, Kant, Heidegger

JEL Classifications: K00, K12, K20, K22

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