theories, parties must offer proof of the facts constituting the relevant context and have to prove them (unless judicial notice is appropriate). Parties can argue about the existence and significance of those facts. And interpreters can interpret consciously and deliberately in light of those facts. These three features make objectivism and subjectivism superior to literalism because the Rule of Law requires non-arbitrary and predictable settlements of disputes. Hiding contextual elements is incompatible with this goal.

§ 2.2. Objectivist Elements

Objectivism significantly expands the set of interpretive elements to include (in addition to the contract’s governing term, the dictionary, and rules of grammar) the contract as a whole, the objective circumstances at formation, the document’s purpose(s), ordinary meanings, trade usages and customs, legal precedents, and any practical construction. This extent of context is sufficient to give apt meanings to contract terms if one accepts that the parties’ intention as revealed to a reasonable person by their manifestations of intention—not their mental intentions—should ground the meaning(s) of a contract’s terms. Many courts accept this view.15

§ 2.2.1. The Whole Contract

Even in jurisdictions sometimes thought to employ literal interpretation, such as New York and Pennsylvania, the courts will take into account, to use New York’s formulation, “the contract as a whole to determine its purpose and intent.”16 Recent New York precedent provides that:

A written contract will be read as a whole; and every part will be interpreted with reference to the whole; and if possible it will be so interpreted as to give effect to its general purpose. . . . The meaning

15E.g., Williams, 132 F.3d at 947.

16W.W.W. Assoc., Inc. v. Giancontieri, 566 N.E.2d 639, 642 (1990). See also Kinek v. Paramount Communications, Inc., 22 F.3d 503, 509 (2d Cir. 1994); Steuart, 444 A.2d, at 661; Aron v. Gillman, 128 N.E.2d 284, 288 (N.Y. 1955); Nau v. Vulcan Rail & Constr. Co., 36 N.E.2d 106, 110 (N.Y. 1942).

of a writing may be distorted where undue force is given to single words or phrases.17

In a well-known passage in Central Hanover Bank & Trust Co. v. Commissioner,18 Judge Learned Hand explained:

There is no more likely way to misapprehend the meaning of language—be it in a constitution, a statute, a will or a contract— than to read the words literally, forgetting the object which the document as a whole is meant to secure. Nor is a court ever less likely to do its duty than when, with an obsequious show of submission, it disregards the overriding purpose because the particular occasion which has arisen was not foreseen. That there are hazards in this is quite true; there are hazards in all interpretation, at best a perilous course between dangers on either hand; but it scarcely helps to give so wide a berth to Charybdis’s maw that one is in danger of being impaled upon Scylla’s rocks.19

Thus, the whole contract is the target for interpretation—the intrinsic context for each provision or word.

The whole contract also is important because a word, sentence, paragraph, or more; or the contract’s structure and relationships among its terms, may shed light on the reasonable meaning(s) of a governing word or term.20 For the same reasons, the courts treat several writings that are parts of the same transaction as one writing for the purpose of interpretation,21 at least when they are executed at the same time.22 A reasonable interpretation treats the contract as a harmonious whole, if possible.

§ 2.2.2. Objective Circumstances

Distinguishing between literalism and objectivism permits us to include the circumstances element within objectivism and to distinguish objective from subjective circumstances. The objective circumstances provide a context of use that, together with the conventions of language use

17Westmoreland Coal Co. v. Entech, Inc., 794 N.E.2d 667, 670 (N.Y. 2003).

18159 F.2d 167 (2d Cir. 1947).

19Id. at 169.

20For an extended illustration, see § 5.2.2.

21Gordon v. Vincent Youmans, Inc., 358 F.2d 261, 262–63 (2d Cir. 1965).

22Talley v. Talley, 566 N.W.2d 846, 851 (S.D. 1997).

within that context, generate the reasonable meaning(s) of the parties’ manifestations of intention when the contract was made. Subjective circumstances, by contrast, lay a basis for drawing inferences about what the parties had in mind when writing or reading, speaking or hearing, the relevant contract language. An objectivist court would believe something like the following statement by the Supreme Court of Connecticut:

The intention of the parties to a contract is to be determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction. The question is not what intention existed in the minds of the parties but what intention is expressed in the language used.23

Crone v. Amado24 is a simple illustrative case. The owners of a guest ranch contracted with a builder to build an addition. The owners’ mortgage agreement, which the builder also signed, provided that $8,700 of the borrowed $25,000 would be used to pay off the existing mortgages on the property; the remaining amount would be held by a realtor, the owners’ agent, to pay the builder’s weekly bills for materials and labor. The contract did not say whether the builder would be paid on a fixed price or cost-plus basis, making it ambiguous. When the cost of construction exceeded the amount held by the realtor, the builder refused to continue, contending that the parties had a cost-plus agreement. The owners, by contrast, contended that the builder had agreed to a fixed price of $16,300, representing the amount of the borrowed money ($25,000) less the amount that the contract required be used to pay off existing mortgages ($8,700). In addition to considering the parol evidence rule and the parties’ practical construction, the Supreme Court of Arizona considered the circumstances when the contract was made. The court wrote:

[N]either of the parties had seen any plans or specifications; no survey had been made of the proposed building site; building materials were scarce; and what were available were rationed under O.P.A. regulations.25

23 Barnard v. Barnard, 570 A.2d 690, 696 (Conn. 1990); see Dome Petroleum Ltd. v. Employers Mut. Liability Ins. Co. of Wisc., 767 F.2d 43, 47 (3d Cir. 1985).

24214 P.2d 518 (Ariz. 1950).

25Id. at 523.