Interpreting Contracts Without Context

45 Pages Posted: 17 Apr 2018 Last revised: 24 Aug 2018

See all articles by John F. Coyle

John F. Coyle

University of North Carolina School of Law

Mark C. Weidemaier

University of North Carolina School of Law

Date Written: April 3, 2018

Abstract

Contracts always present questions of interpretation. This is nothing new. What is new is the concern that courts lack the tools to resolve many of these questions. When text is unclear, courts look to context, examining extrinsic evidence for clues as to what the parties intended. But what if there is no evidence of context? Some contract theorists worry about these contractual “black holes” based on two assumptions. First, that ostensibly standard clauses may vary in ways that have escaped the notice of transaction participants and other market actors. Second, that contract law’s usual interpretive tools cannot help courts decide whether to assign different meanings to different versions of a clause. If true, opportunistic parties might exploit textual variation to achieve unexpected results.

This Article critically evaluates these assumptions. Drawing on multiple, hand-coded samples of commercial contracts, we first document widespread and problematic variance in ostensibly standardized choice-of-law and arbitration clauses. This finding provides empirical support for the concern about contractual black holes. We push back, however, against the claim that contract law must change to accommodate these findings.

Keywords: contract interpretation; black holes; arbitration; choice-of-law

Suggested Citation

Coyle, John F. and Weidemaier, Mark C., Interpreting Contracts Without Context (April 3, 2018). 67 American University Law Review 1673 (2018); UNC Legal Studies Research Paper. Available at SSRN: https://ssrn.com/abstract=3155486

John F. Coyle (Contact Author)

University of North Carolina School of Law ( email )

Van Hecke-Wettach Hall, 160 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380
United States
919-843-9634 (Phone)

HOME PAGE: http://www.law.unc.edu/faculty/directory/coylejohnf/

Mark C. Weidemaier

University of North Carolina School of Law ( email )

Van Hecke-Wettach Hall, 160 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380
United States
919.843.4373 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
87
rank
272,412
Abstract Views
240
PlumX