§ 4.6.1. Subjectivist Criticisms

Critics generally do not distinguish between the plain meaning and four corners rules. They advance three principal arguments against them together. Two of these arguments have considerable force. In this section, we will present the principal critical arguments in their strongest terms. In the next section, we will present the principal rejoinders.

The chief criticism of the plain meaning and four corners rules has been that there are no plain meanings that an interpreter can find on a contract document’s face. Corbin, for example, insisted that plain meanings emerge from the words in their contexts: “[S]ome of the surrounding circumstances always must be known before the meaning of the words can be plain and clear.”172 Further, Professor John Henry Wigmore argued, the idea that a court can find a contract’s words to be unambiguous, without consulting the context, rests on a fallacy: “The fallacy consists in assuming that there is or ever can be some one real or absolute meaning.”173 Corbin added:

[W]hen a judge refuses to consider relevant extrinsic evidence on the ground that the meaning of written words is to him plain and clear, his decision is formed by and wholly based upon the completely extrinsic evidence of his own personal education and experience. . . . A word has no meaning apart from [its context]; much less does it have an objective meaning, one true meaning.174

We can call this the “argument from skepticism,” noting again that it is directed against literalism, not objectivism, which these two scholars did not consider.

A second, related argument is founded on anti-formalism. Formalism, in this context, puts a burden on the parties to express themselves in the law’s abstract forms or else to forgo the law’s benefits. The plain meaning and four corners rules put a burden on the parties to express their intentions in the contract document clearly. Parties who do not express their intentions in this way fail to meet the law’s requirements as to form. Professor Melvin A. Eisenberg favors, by contrast, what he calls responsive contract law. He believes that

172CORBIN, supra note 8, § 542, at p. 100.

173WIGMORE, supra note 170, at § 2461.

174Corbin, supra note 39, at 171.

will bring interpretive decisions closer to implementing the parties’ subjective intentions. This should be the goal of contract interpretation due to the principles of contractual freedom.

§ 4.6.2. Objectivist Rejoinders

Before turning to the three corresponding rejoinders, note that the subjectivist critics generally do not distinguish between the plain meaning rule and the four corners rule.179 The two rules are analytically distinct, and the distinction has consequences. To repeat, the four corners rule requires a court to decide whether a contract is ambiguous on the basis of the contract document alone—without resort to extrinsic evidence: It prescribes the elements of interpretation that a court may take into account when deciding the question of ambiguity. The plain meaning rule, by contrast, prescribes the legal consequence of a finding that a contract is unambiguous in the contested respect: It requires a court to give an unambiguous contract its plain (i.e., unambiguous) meaning. On its own, the plain meaning rule does not foreclose a court from considering extrinsic evidence bearing on the question of ambiguity, which must be answered before the plain meaning rule can be applied.

The distinction’s consequences are significant when we consider alternatives to the conflation of the two rules. An objectivist court might endorse the plain meaning rule and jettison the four corners rule. More elements of contract interpretation then could be considered when answering the question of ambiguity.180 Evidence of a trade usage, for example, is objective extrinsic evidence that could reveal an extrinsic ambiguity. The law could allow the court to consider a proffer of evidence or evidence of a trade usage in a check for such an ambiguity. After jettisoning the four corners rule, the plain meaning rule still would require that the court find an ambiguity in the contract language before admitting evidence of a trade usage for the fact-finder.

With respect to the argument from skepticism, a defender of the plain meaning rule first would assert that, in the real world, there are many contracts whose terms are unambiguous in the contested respect. There may be clarity for the practical purpose at hand. As indicated in

179E.g., PERILLO, supra note 170; Kniffin, supra note 170.

180See Bohler-Uddeholm America, 247 F.3d at 93.

Chapter 1, many appellate cases involve one party advancing a far-fetched meaning that can be dismissed easily, leaving the contract unambiguous in the contested respect.181 Other cases, such as those involving factual disputes only or disputes that do not reach the courtroom, probably involve many, many more clear terms.182 Second, pace the skeptics, the two rules do not assume that clarity in any case results from words with “some one real or absolute meaning” apart from some context. After all, the two rules fully recognize that language can be ambiguous and depend on context—at least the document as a whole—for its meaning. Third, the argument from skepticism itself is an abstract, philosophical argument about the nature of language. The argument, ironically, is not sensitive to the context in which judges address the question of ambiguity. In the judicial context, the judge’s job is to consider only the reasonable meanings (usually two) that the parties advance. There may be plenty of ambiguity in a contract in the abstract while there is none as concerns the dispute before the court. Fourth, the argument from skepticism is better aimed at literalism, which focuses on single words or short phrases and the dictionary without attending to the context in which the parties used the words. The skeptical argument misses its target when aimed at the two rules as they generally are employed by the courts.

With respect to the argument from anti-formalism, a defender of the plain meaning rule might argue that the goals of fostering secure transactions, holding parties responsible for their expressions when fair, protecting third parties’ interests, and ensuring administrability, support some degree of formalism. These goals support requiring the parties to express themselves in a way that the law (and contract parties) can recognize easily. They may outweigh the goal of respecting the contractual freedoms by ascertaining the parties’ subjective intentions. For both parties and others, investigating the parties’ subjective intentions can be costly, if such investigations are possible without rights to discovery and perhaps even then. In addition, the principle of responsibility justifies holding parties to their objective expressions when fair. Doing so poses an incentive for the parties to express themselves clearly, to the advantage of those who rely on the document and of courts who must decide the question of ambiguity. The three principles may justify implementing the parties’ objective intention even though that intention does not track their subjectivities.

181See § 1.2.1.

182Id.