INDEX

A

Abstract philology, 170 Adhesion contracts, 182

Alamo Savings Assoc. of Texas, Bache Halsey Stuart Shields, Inc. v., 131–33

Alaska Housing Finance Corp., Sprucewood Investment Corp. v., 30–32

Allied Mutual Insurance Co., C & J Fertilizer, Inc., v. 190–91

Allstate Ins. Co. v. Watson, 173 Amado, Crone v., 43, 44

Ambiguity, 105–49. See also Ambiguous contracts; Resolving ambiguities; Terms, ambiguity of; Unambiguous contracts

argument from anti-formalism, 145, 147

argument from principle, 145, 148 argument from skepticism, 144,

146–47

decision procedures, 111–18 determination of, 18 extrinsic, 107–09

and four corners rule, 109–11, 118 criticisms of, 143–49

generally, xi, xii and good faith, 60 intrinsic, 107–08

judge, role of, 118–20 jury, role of, 118–20 latent, 107

law of, 109–22

and literalism, 18, 155 nature of, 106–09

need for ambiguous language, 128–31

no need for ambiguous language, 131–34

no need to find, 138–43 Corbin on, 138–39 Farnsworth on, 138–39

Restatement (Second) of Contracts, 139–40

Uniform Commercial Code (UCC), 140–43

objective contextual interpretation, 203–09, 224–25

and objectivism, 22

judge and jury, roles of in resolving ambiguities, 156–57

parol evidence rule distinguished from law of ambiguity, 120–22

patent, 107

and plain meaning rule, xii, 103–04, 109–11

criticisms of, 143–49 sentence ambiguity, 13 structural ambiguity, 14 and subjectivism

judge and jury, roles of in resolving ambiguities, 157

vagueness, 13

Ambiguous contracts, 134–38 sentence ambiguity, 13–14,

134–36

structural ambiguity, 14, 136–37 term ambiguity, 13, 134 vagueness, 14, 137–38

228

American Federation of State, County, and Municipal Employees Local 2957 v. City of Benton, 52–53, 177–78

American Law Institute, 73 Application, distinguished from

interpretation, 122 Argument from anti-formalism, 145,

147

Argument from principle, 145, 148 Argument from skepticism, 144, 146–47 ATVs (four-wheeled all-terrain vehicles),

133, 168–70

Axel Newman Heating and Plumbing

Co., Inc., Paul W. Abbott, Inc. v., 55

B

Bache Halsey Stuart Shields, Inc. v. Alamo Savings Assoc. of Texas, 131–33

Bad faith in interpretation, 60

Bank Julius Baer & Co. v. Waxfield Ltd.,

79–80

Bank of the West v. Superior Court, 170 Bar, ambiguity of word, 121, 221 Black-letter provision, 89

Boilerplate clauses, 182 merger clause, 78

Bowdoin Construction Corp., Canam Steel Corp. v., 136–37

Breach

limits of parties’ intention, 15 Breyer, Stephen G., 204

Bush, Hicks v., 100–01

C

Calamari, John D., 24, 224

Canam Steel Corp. v. Bowdoin Construction Corp., 136–37

Canons of interpretation, 59–60 Cardozo, Benjamin N., 169–70

Central Hanover Bank & Trust Co. v. Commissioner, 42

Circumstances when contracting, 43–44, 168–70

City of Benton, Arkansas, American Federation of State, County, and Municipal Employees Local 2957 v.,

52–53, 177–78

C & J Fertilizer, Inc. v. Allied Mutual Insurance Co., 190–91

INDEX

Coliseum Towers Associates v. County of Nassau, 50–51, 179–80

Collateral agreements, 94–97. See also Oral agreements

parol evidence rule, 68

Commissioner, Central Hanover Bank & Trust Co. v., 42

Completely integrated agreement, 65

Conde Nast Publications, Myskina v.,

84–86 Consistency, xi Context

and literalism, 38–41 Contextualism, 115. See also Objective

contextual interpretation Contractual freedoms, 3–7

and parties’ intention, 3–6 respecting, 24

Contra proferentem, 15, 187–89, 191 Conventions of language use, 220–223 Corbin, Arthur L., 38, 106, 206–08,

224, 229

on ambiguity, 113, 115, 119, 138–39 four corners and plain meaning rule,

criticisms, 144

on dualism between objectivism and subjectivism, xiii

fault principle, 29 interpretation, defined, 207 and objectivism, 20–21, 24 and subjectivism, 206–08, 224

County of Nassau, Coliseum Towers Associates v., 50–51, 179–80

Course of dealing

resolving ambiguities, 176–78 subjectivism, 52–54

Course of negotiations resolving ambiguities, judicial

resolution, 165–68 subjectivism, 54–56

Course of performance objectivism, 50–51

resolving ambiguities, 178–80

Crestview Bowl, Inc. v. Womer Const. Co., Inc., 183–84

Crone v. Amado, 43, 44 Customs

and objectivism, 47–48, 159 resolving ambiguities, 173–76

INDEX

D

Decision procedures

and ambiguity, 111–18 Default rules, 186–87 Deletions

draft document, 54

Dennison v. Harden, 19–20 Dictionaries

and literalism, 38, 39, 220

and resolving ambiguities, 160, 161 Doctrine of fault, 29–30, 115–16

Dolco Packaging Corp., Petula Associates, Ltd., v., 48–49

Draft document deletions, 54

resolving ambiguities, 187–88

E

Economic analysis, 16, 218–20 Eisenberg, Melvin A., 144–45, 215

Ejusdem generis, 59

Electronic records, writings and, 71–74

Electronic Signatures in Global and National Commerce Act, 73 Elements of contract interpretation,

overview, 35–62. See also specific topics

guides to interpretation, 57–61 non-interpretive rules, 61–62

Elliot & Frantz, Inc. v. Ingersoll Rand Co., 137–38

Enforcement of contract, generally, xiv, 223 Evidentiary base, 36

Evident or conventional purpose(s), 172–73

Expressio unis est exclusio alterius, 59 Extrinsic ambiguity, 107–09, 117 Extrinsic evidence, 68, 78, 90–91

judge and jury, role of, 118, 154–55 and parol evidence rule, 120

and plain meaning, 116, 126 unambiguous contracts, 126, 128

F

Fair dealing, 60 Fairness

judicial resolution of ambiguities, 182–83, 185

229

Falkowski v. Imation Corp., 181 Farnsworth, E. Allan

on ambiguity, 13, 106, 138, 204, 205, 224

failure of contract language, 13, 204, 205

Fishman v. LaSalle National Bank, 45 Force majeure clause

sentence ambiguity, 135

whole contract, judicial resolution, 162–65

structural ambiguity, 136 term ambiguity, 13, 14 unambiguous contracts, 129

Formalism, 144, 222

parol evidence rule, 198–99 Four corners rule, 66

and ambiguity, 109–11, 118, 143–49

criticisms of, 143–49 objectivist criticisms, 146–49

subjectivist criticisms, 144–46 judge, role of, 118–20

objective contextual interpretation, 196–99, 201–02, 209

Fraud

non-consequences of integrated written contracts, 98–100

G

Giancontieri, W.W.W Associates, Inc. v., 22, 23, 27

Gianni v. R. Russel & Co., 82–84 Gillmor v. Macey, 133, 168–70

Goals of contract interpretation, 1–8 contractual freedoms, 3–7

Rule of Law, 8

security of transactions, fostering, 7

settlement of disputes, peaceful, 7–8 Good faith

in interpretation, 60–61 Government contracts

resolving ambiguities, 191

Guardian Life Insurance Co. of America, Parrot v., 80

G.W. Thomas Drayage & Rigging Co., Inc., Pacific Gas & Electric Co v., 32, 112–15, 118

230

H

Haggard v. Kimberly Quality Care, 91–92 Hall v. Process Instruments & Control,

Inc., 91

Hand, Learned, 19, 42

Harden, Dennison v., 19–20

Hearst Communications, Inc. v. Seattle Times Co., 129–31

Hicks v. Bush, 100–01 Holmes, Jr., Oliver Wendell, 29

Hurst v. W.J. Lake & Co., 107, 133–34

I

Identifying terms, 63–104. See also Parol evidence rule

integrated written contracts, 69–93 non-consequences of integration, 63–104 objective contextual interpretation, 195

Imation Corp., Falkowski v., 181 Improvements, definitions, 210

Ingersoll Rand Co., Elliot & Frantz, Inc. v.,

137–38 Insurance contracts

resolving ambiguities, 189–91 Integrated agreement, 65 Integrated written contracts, 69–93

all prior agreements, defined, 79–80 complete integration, 76

electronic records, writings and, 71–74 establishing document’s state of

integration, 77–78 goals of rule, 69–70

integrated agreement, defined, 74 kinds of agreements, 74

and literalism, 77–81 non-consequences, 93–104

ambiguity, resolving, 103–04 collateral agreements, 94–97 conditions, 97–98, 100–01 formation, 97–98

fraud, 98–100 invalidating causes, 97–98

reformation of contract, 102 objective intention to integrate, 81–88

naturally, defined, 81 and objectivism, 77–78 partial integration, 74–76

subjective intention to integrate, 88–93 black-letter provision, 89

INDEX

and subjectivism, 78 undifferentiated integration, 76–77

Integration clause. See Merger clauses Integration of contract

objective contextual interpretation, 195–97

and objectivism, 27 Intention of parties. See Parties’

intention

Intermountain Eye and Laser Centers, P.L.L.C. v. Miller, 135–36

International Business Machines, Inc., South Road Associates, LLC v., 127

Interpretation definitions, 9, 121–22 guides to, 57–61

canons of interpretation, 59–60 good faith in interpretation, 60–71 standards of preference in

interpretation, 57–59 Intrinsic ambiguity, 107–08 Invalidating doctrines, xiv, 194

J

Joseph E. Seagram & Sons, Inc., Lee v.,

94–95 Judge and jury

and ambiguity, 118–20 resolving ambiguities, 152–58

extrinsic evidence, 154–55 jury instructions, 157–58

law or fact, question of, 152–55 literalism, 155–56

objectivism, 156–57 subjectivism, 157

K

Kass v. Kass, 27–28, 34

Kelly Services, Inc., Reardon v., 171–72 Kimberly Quality Care, Haggard v., 91–92

L

Language

failure of, 13–14

objective contextual interpretation, 220–23

and objectivism, 47

LaSalle National Bank, Fishman v., 45 Latent ambiguity, 107

INDEX

Lath, Mitchell v., 96–97 Lawfulness

judicial resolution of ambiguities, 182–84 Law or fact, question of, 152–55

Lee v. Joseph E. Seagram & Sons, Inc.,

94–95 Legal precedents

objectivism, 48–50 resolving ambiguity, 180–81

Legal rules, formulation of as goal, 8 Lehman, Judge, 96–97

Literalism, 17–21, 155–56, 197, 226 and context, 38–41

contrast to objectivism, 22 described, 2, 17–21

and dictionaries, 18, 38, 39 elements, 36–41

and evidentiary base, 36 explained, 35

generally, xiii

meaning of word or phrase, 123–26 and merger clauses, 78–81

and parties’ intention, 6

and sentence ambiguities, 220 state of integration, establishing,

77–81

words of the contract, 17–18, 37–38

M

Macey, Gillmor v., 133, 168–70 Masterson v. Sine, 32, 90–92

McAbee Construction, Inc. v. United States,

87–88

McChesney, Steuart v., 39, 40 Meaning, generally, 9, 116 Meaning of contract term, 9 Merger clauses

boilerplate merger clause, 78 and literalism, 78–81

objective contextual interpretation, 197

and objectivism, 87–88 and subjectivism, 88

Miller, Intermountain Eye and Laser Centers, P.L.L.C. v., 135–36

Minnesota Mining & Mfg. Co., Sound of Music Co. v., 166–67

Mitchell v. Lath, 96–97 Monist theories, 214–18

231

Myskina v. Conde Nast Publications, Inc., 84–86

N

Namad v. Salomon, Inc., 11

Nanakuli Paving and Rock Co. v. Shell Oil Co., 141–43

National Conference of Commissioners on Uniform State Laws, 73

Naturally, defined, 81, 90 Negotiations, course of. See Course of

negotiations

Non-consequences of integrated written contracts, 93–104

ambiguity, resolving, 103–04 collateral agreements, 94–97 conditions, 97–98

conditions precedent, 100–01 fraud, 98–100

invalidating causes, 97–98 reformation of contract, 102

Non-interpretive rules, 61–62 Normative reasons

objective contextual interpretation, 198–202, 209–11

Noscitur a sociis, 59

O

Objective contextual interpretation, xiii, 115, 193–226. See also Objectivism

ambiguity, 203–09, 224–25 resolving, 211–14

four corners rule, 196–99, 201–02, 209 goals, 223

integration, 195–97

language use, conventions of, 220–23 merger clauses, 197

normative reasons, 198–202, 209–11 parol evidence rule, normative reasons,

198–99, 201–02 pluralist theories, 214–18 public policy, 194

resolving ambiguity, 211–14 Rule of Law, 196, 201

monism, 217

and subjectivism, 202–03, 205, 225–26 tasks in contract interpretation,

194–214

and ambiguity, 203–09

identification of contract terms, 195–97

integration, 195–97 normative reasons, 198–202,

209–11

resolving ambiguity, 211–14 subjectivism, contrasted, 202–03, 205

Objectivism, 2, 21–28. See also Objective contextual interpretation

and ambiguity, 22 criticisms, 146–49

circumstances, 42–44

course of performance, 50–51 customs, 47–48, 159

defined, 2, 21–22 elements, 41–51 explained, 35

four corners rule, criticisms, 146–49 generally, xiii, 2

integrated written contracts, 77–78 and integration of contract, 27 intention to integrate, 81–88

naturally, defined, 81 and language, 47

legal precedents, 48–50

and meaning of language, 29 meanings, ordinary, 45–47 and parties’ intention, 5–6, 43 plain meaning rule, criticisms,

146–49

practical construction, 50–51 purposes, 44–45, 170–72

and reasonable expectations, 25–26 and reasonable meaning, 51 resolving ambiguities

judge and jury, roles of, 156–57 judicial resolution, 158

statutory definitions, 48–50 trade usages, 47–48, 159 whole contract, 41–42

Option contracts

resolving ambiguities, 191 Oral agreements

collateral agreements, 33, 91 parol evidence rule, 67–68

Ordinary meanings

judicial resolution of ambiguities, 159–62, 172

and objectivism, 45–47

P

Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging Co., Inc., 32, 112–15, 118

Parol agreements, 34 Parol evidence rule, 63–78

admissibility, 93

admission to show no binding agreement, 97–98

ambiguity, law of, distinguished, 120–22 collateral agreements, 68, 94–97 completely integrated agreement, 65 complications, 64–65

consequences, 65

electronic records, writings and, 71–74 exceptions, 66–68

extrinsic evidence, 68 formalism, 198–99 four corners rule, 64, 66 fraud, 98–99

goals of the rule, 69–70 integrated agreement, 65 oral agreements, 67–68

partially integrated agreement, 65 plain meaning rule, distinguished, 104,

120–22

rule of evidence contrasted, 65 statement of the rule, 64–65 and subjectivism, 32–33

subsequent written or oral agreements, 67–68

Parrot v. Guardian Life Insurance Co. of America, 80

Partially integrated agreement, 65 Parties’ intention

and contractual freedoms, 3–6 generally, xi

limits of, 15–17 and literalism, 6 manifestation of, 7

and objectivism, 5–6, 43 statement of, 172–73 subjective intentions, 5, 7 testimony as to, 56

Patent ambiguity, 107

Paul W. Abbott, Inc. v. Axel Newman Heating and Plumbing Co., Inc., 55

Peerless (ships), 16–17, 188–89 Perillo, Joseph M., 24, 224

INDEX

Petula Associates, Ltd. v. Dolco Packaging Corp., 48–49

The Pillsbury Co., Inc. v. Wells Dairy, Inc., 162–65

Plain meaning rule

and ambiguity, xii, 103–04, 109–11 described, 105

criticisms of, 143–49 objectivist criticisms, 146–49

subjectivist criticisms, 144–46 described, 126–28

parol evidence rule distinguished, 104, 120–22

Pluralist theories, 214–18

Posner, Richard A., 16, 108, 124–25, 218 Practical construction

objectivism, 50–51

resolving ambiguities, 178–80 Prior course of dealing

subjectivism, 52–54

Process Instruments & Control, Inc., Hall v., 91

Promising, conventions of language use, 221

Public policy

objective contextual interpretation, 194 Purpose(s) of the contract, 44–45, 170–72

Q

Quantum Chemical Corp., Wulf v., 170–71

R

Raffles v. Wichelhaus, 16, 188–89 Rainey v. Travis, 95–96

Rakoff, Todd D., 25–26, 199–200

Reardon v. Kelly Services, Inc., 171–72 Reasonableness

expectations, 190–91 generally, xi

and objectivism, 25–26 judicial resolution of ambiguities,

182–84

Reformation of contract, 102 Resolving ambiguities, xi, xii, 14–15,

151–91

contra proferentem, 187–89, 191 course of dealing, 176–78 course of performance, 178–80 customs, 173–76

233

default rules, 186–87 fairness, 182–85 government contracts, 191 insurance contracts, 189–91

interpretation against drafter, 187–89 judge and jury, roles of, 152–58

extrinsic evidence, 154–55 jury instructions, 157–58

law or fact, question of, 152–55 literalism, 155–56

objectivism, 156–57 subjectivism, 157

judicial precedents, 180–81 judicial resolution, 158–85 circumstances, 168–70

course of dealing, 176–78 course of negotiations, 165–68 course of performance, 178–80 customs, 173–76

fairness, 182–85

judicial precedents, 180–81 lawfulness, 182–84 objective theory, 158

ordinary meanings, 159–62, 172 parties’ intention, statement of, 172–73 practical construction, 178–80 purpose(s), 170–72

reasonableness, 182–84 standardized agreements, 181–82 statutes, 180–81

subjective theory, 158 trade usages, 173–76

understanding, statement of, 172–73 whole contract, 162–65

lawfulness, 182–84 no agreement, 188–89

non-existent or ambiguous contexts, 186–89

contra proferentem, 187–89, 191 default rules, 186–87

interpretation against drafter, 187–89, 191

no agreement, 188–89

objective contextual interpretation, 211–14

option contracts, 191

parties’ intention, statement of, 172–73 practical construction, 178–80 reasonableness, 182–84

234

standardized agreements, 181–82 subjectivism, 213

judge and jury, roles of, 157 trade usages, 173–76

whole contract, judicial resolution, 162–65

Responsive contract law, 144 Restatement of Contracts

ambiguity, integrated written contracts, 103–04

objective interpretation, 26–27 subjectivism, 28

Restatement (Second) of Contracts ambiguity

no need to find, 139–40 resolving ambiguities, 154

“buy,” meaning of, 28, 117 course of dealing, 176–78 definition of contract, 195–96 doctrine of fault, 115–16 fairness, 182–83

and four corners rule, 11, 118 integrated written contracts, 72

ambiguity, resolving, 103–04 interpretation, definition, 9, 121 judicial precedents, 180–81

on non-interpretive rules, 61–62

on objective contextual interpretation, 201, 205–08, 224

resolving ambiguity, 213–14

on objective interpretation, 46, 49–50 and parol evidence rule, 67

partial integration, 74

and plain meaning rule, 110 reasonableness, 182–83 resolving ambiguity, objective

contextual interpretation, 213–14 standards of preference in

interpretation, 57–59

on subjective interpretation, 29, 32, 89–90 trade usages, 175

undifferentiated integration, 76–77

Rice v. United States, 160–62

Robson v. United Pacific Insurance Co.,

178–79

Roman v. Roman, 10, 11

R. Russel & Co., Gianni v., 82–84 Rule of evidence

parol evidence rule contrasted, 65

INDEX

Rule of Law

consistency, value of, xi dispute settlements, 41 generally, 2

objective contextual interpretation, 196, 201

monism, 217

security of transactions, goal to foster, xi, 7

settlement of disputes, peaceful, 7–8

S

Salomon, Inc., Namad v., 11

Schwartz, Alan, 36, 40, 215–16, 219–20 Scott, Robert E., 36, 40, 215–16, 219–20

Seattle Times Co., Hearst Communications, Inc. v., 129–31

Security of transactions, goal to foster, xi, 7 Sentence ambiguity, 13, 134–36

whole contract, 162–65 Settlement of disputes

peaceful settlement as goal, 7–8 Shared meaning, 61

Shelby County State Bank v. Van Diest Supply Co., 135

Shell Oil Co., Nanakuli Paving and Rock Co. v., 141–43

Sine, Masterson v., 32, 90–92

Sound of Music Co. v. Minnesota Mining & Mfg. Co., 166–67

South Road Associates, LLC v. International Business Machines, Inc., 127

Sprucewood Investment Corp. v. Alaska Housing Finance Corp., 30–32

Standardization of terms, 26, 182, 199–200 Standards of preference in interpretation,

57–59 Statute of Frauds, 71

Statutory definitions, 48–50, 180–81 St. Augustine, 220

Steuart v McChesney, 39, 40 Stroud v. Stroud, 166

Structural ambiguity, 14, 136–37 Subjective contextualism, 115 Subjectivism, xii, 2, 28–34

and ambiguity criticisms, 144–46

and circumstances, 56–57 contrast to objectivism, 21, 33

INDEX

course of dealing, 52–54 course of negotiations, 54–56 elements, 51–57

explained, 35

four corners rule, criticisms, 144–46 generally, xiii, 2, 28–34

integrated written contracts, 78 intentions, 5, 7

party’s testimony as to, 56 intention to integrate, 88–93

black-letter provision, 89 objective contextual interpretation,

202–03, 205, 225–26

plain meaning rule, criticisms, 144–46 prior course of dealing, 52–54 resolving ambiguities, 213

judge and jury, roles of, 157 judicial resolution, 158

and use of purpose(s), 172

Superior Court, Bank of the West v., 170

T

Tasks in contract interpretation, xii–xiii, 8–17

ambiguous terms, kinds of, 12–14 limits of parties’ intention, 15–17 meaning of contract term, 9 resolving ambiguities, 14–15

and theories of contract interpretation, xiii, 2

unambiguous terms, 9–12 Terms ambiguity of

generally, 134 kinds of, 12–14

Terms. See also Identifying terms; Terms, ambiguity of

meaning of, 9 standardization of, 26 unambiguous terms, 9–12

Terms of art, 159

Thayer, James Bradley, 63–64

Theories of contract interpretation, xiii, 2, 17–34. See also Literalism; Objectivism; Subjectivism

Theory, role of, xiii, 2 Third parties

reliance by, 25

Trade usages, 107, 139, 146

judicial resolution of ambiguities, 159

235

and objectivism, 47–48, 159 resolving ambiguities, 173–76

Travis, Rainey v., 95–96

Traynor, Roger, 32, 91, 113–15, 119, 131

U

UCC. See Uniform Commercial Code (UCC)

Unambiguous contracts, 9–12, 122–34 extrinsic evidence, 126, 128

literal meaning of word or phrase, 123–26

need for ambiguous language, 128–31 no need for ambiguous language,

131–34

plain meaning of document, 126–28 Understanding

common basis of, 178 statement of, 172–73

Uniform Commercial Code (UCC) on ambiguity, 117

no need to find, 140–43

Article 2, 71, 73, 76, 90, 117, 174–75, 206 complete integration, 76

course of dealing, 52, 178

course of performance, 50, 178–79 electronic records, 71–73

objective contextual interpretation, 206 parol evidence rule, 68, 71–72

partial integration, 75 Section 2-202, 75–76 subjectivism, 90

trade usages, 47–48, 173–75

Uniform Electronic Transactions Act, 73

United Pacific Insurance Co., Robson v.,

178–79

United States, Rice v., 160–62

United States v. McAbee Construction, Inc., 87–88

Usage of trade. See Trade usages

V

Vagueness, 13

ambiguous contracts, 137–38

Van Diest Supply Co., Shelby County State Bank v., 135

W

Watson, Allstate Ins. Co. v., 173