Interpretation and Implied Terms in Contract Law

Encyclopedia of Law and Economics, 2nd Edition, Forthcoming

Virginia Law and Economics Research Paper No. 2009-12

25 Pages Posted: 18 Sep 2009 Last revised: 27 Sep 2009

George M. Cohen

University of Virginia School of Law

Date Written: September 15, 2009

Abstract

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.

Keywords: contracts, complete contracts, incomplete contracts, interpretation, implied terms, textualism, contextualism, superior risk bearer, opportunism, default rules, court competence, court error, litigation costs

Suggested Citation

Cohen, George M., Interpretation and Implied Terms in Contract Law (September 15, 2009). Encyclopedia of Law and Economics, 2nd Edition, Forthcoming ; Virginia Law and Economics Research Paper No. 2009-12. Available at SSRN: https://ssrn.com/abstract=1473854

George M. Cohen (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States
(804) 924-3814 (Phone)
(804) 982-2079 (Fax)

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