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of a legal reason. The weight of a legal reason, however, is a function of the other legal reasons in the case together—not of an additional metanorm specifying the weight of the negligence standard in general or of all possible concrete legal reasons stemming from it. There are too many variations on the facts in any case for a single and determinate metanorm to do non-arbitrary justice. Weight thus is internal to the congeries of relevant legal reasons in each case: The weight of one reason depends on the weight of the other reasons.39 As a result, weighing the reasons often requires discretion to do justice under the law in cases.40 There is nothing wrong with discretion in adjudication when it is justified by a pluralism of applicable normative and other proper considerations, and a meta-norm for assigning weights is absent.41
This endorsement of weighing indicates the response to arguments
that
[f]or any given maxim [of contract interpretation] that would persuade a judge to a certain conclusion a contrary maxim may be found that would persuade him to the opposite (or contradictory) conclusion.42
This would be true only if one assumes that each single rule or canon of interpretation is supposed to determine the right result in a case on its own. Any rule or canon that cuts against it then would have a contradictory implication. But the rules and canons of interpretation, like legal rules and principles generally, are not thus determinate. Rather, they have a dimension of weight when applied in a case that avoids the claimed contradiction.43
§ 6.2.2. Economic Analysis
We have said almost nothing about the economics of contract interpretation. A number of leading scholars, including Judge Richard A. Posner,
39Id. at 56.
40Id. at 50–62.
41Id. at 107–202.
42Edwin W. Patterson, The Interpretation and Construction of Contracts, 64 Colum L. REV. 833, 852 (1964). See also Duncan Kennedy, Form and Substance in Private Law Adjudication, 89 HARV. L. REV. 1685, passim (1976).
43See BURTON, supra note 38, at 171–78.
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Schwartz, and Scott, have put forth interesting economic analyses.44 The reason for neglecting them is that the leading analyst’s conclusions center strikingly on literalism as the preferred theory of contract interpretation.45 For example, Schwartz and Scott, as the result of their clever and most sophisticated analysis of firm-to-firm contracts, advocate interpretation of these contracts on the basis of what they call Bmin. They define Bmin as the minimum necessary evidentiary base for contract interpretation (a minimum set consisting of four interpretive elements) composed of
the parties’ contract, a narrative concerning whether the parties performed the obligations that the contract appears to require, a standard English language dictionary, and the interpreter’s experience and understanding of the world.46
Their argument in sum is that, in the absence of agreement on another mode of interpretation, firms would prefer that the courts interpret firm- to-firm contracts on the basis of Bmin and that courts should do so because doing what firms want would foster efficiency.
Though they appear to think that Bmin is Willistonian, it is best understood as literalist. (Williston was an objectivist.47) The contract document and a dictionary stand out in the passage quoted above. The other elements do not bear casual scrutiny. It is a mistake to include the narrative to which Schwartz and Scott refer. We cannot determine whether a party performed its contract obligations until after we have identified and interpreted the contract’s terms. The last element also is problematic because it is not an interpretive element, part of an evidentiary base, at all. Different interpreters, moreover, will come to an interpretive problem with different experiences and understandings. Schwartz and Scott see the world through the lens of economics; others see the world through common sense, religion, philosophy, social science, or something else. A key function of the law and the evidence is to leaven these differences by providing an obligation to follow the law and common legal standards, for the sake of predictability and equal treatment. It is hard to believe
44Richard A. Posner, The Law and Economics of Contract Interpretation, 83 TEXAS L. REV.
1581 (2005); Schwartz & Scott, supra note 34.
45See Posner, supra note 44, at 1606; Schwartz & Scott, supra note 34, at 572; Robert E. Scott, The Case for Formalism in Relational Contract, 94 Northwestern L. REV. 847, 848 (2000).
46Id.
47See § 1.3.1.
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that contracting parties would want the resolution of their disputes to depend on whether the interpreter is an economist, a philosopher, or a common sense lawyer. Schwartz and Scott’s last element thus should be excluded. We are left (by the best interpretation of the passage) with literalism—the contract’s words and the dictionary.
Much has been said in this book about literalism. We have suggested in sum that it is often arbitrary and, in any event, undesirable. Meaning varies with the context of language use. Hence, without considering a context at least implicitly,48 literalism too often assigns inapt meanings to contract language, undermining the law’s predictability. The dictionary typically gives several meanings and grammatical functions for a word. It generally provides no meta-norm for choosing among those meanings and functions. Dictionaries also give general definitions which may not draw the fine distinctions needed to ascertain the parties’ intention. Literalism offers no resources for resolving sentence ambiguities, structural ambiguities, or vagueness, all of which are common in contracts. Indeed, there is no literal meaning if an ambiguity appears. When there is no literal meaning, literalism logically requires that the case be dismissed. It thus abandons the law’s dispute settlement function in a great many cases. Truly, literalism is not a viable option. Consequently, the leading economic analyses of contract interpretation miss the mark.
§ 6.2.3. The Conventions of Language Use
The meaning of language is not constituted by the dictionary or what was in the parties’ minds but, instead, by the conventions of language use in various contexts. Consider Ludwig Wittgenstein’s famous and influential criticism of St. Augustine’s theory of meaning. According to Wittgenstein, Augustine held that the individual words in a language stand for (correspond to) objects: “Every word has a meaning. This meaning is correlated with the word. It is the object for which the word stands.”49 Literalism implicitly embraces a theory of meaning much like this one. It focuses on individual words. It looks to the dictionary to find the meaning that is correlated with the word. And the meaning is supposed to be an object in the real world.
48See § 2.1.3.
49WITTGENSTEIN, supra note 26, at § 1.
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Though accepting that this view of meaning may be true for some words in some contexts of use, Wittgenstein believed that there was much more to a language. He focused on the multifarious ways in which a language can be used: “[T]he meaning of a word is its use in the language.”50 Thus, in addition to naming objects, our language permits us to exclaim (Oh my!), to predict, to ask questions, to do arithmetic, to make a joke, to say something ironically, to thank, to curse, to greet, to play, to guide conduct, to explain, and to use it in many, many other ways.51 The same word may have different meanings depending on how it is used and in what context. The word bar, for example, might refer to an examination when used by a law student who is asking a professor what courses she should take, to a legal organization when used by a client accusing her lawyer of commingling funds, to sand in a river when used in a warning by a riverboat’s captain, and to a prohibition when a bar owner ejects a rowdy customer. How words are being used on an occasion—what they mean— depends on the practice(s) in which they are embedded and the conventions of language use which guide that practice—what Wittgenstein called a “language game.” A dictionary might indicate that bar has these four meanings (and others), some of which are nouns and others verbs, but it cannot tell us which one is the apt meaning on which occasion. For that, we need the relevant language conventions, which require that we know the context of use.
Promising and contracting, moreover, involve distinctive uses of language. The content of a promise does not name an object, as can some nouns in descriptive sentences under some circumstances. Its content refers instead to actions, events, persons, states of affairs, and other things in the imaginary world of a contract.52 Interpretation gives meaning to the content of a promise when it settles the shape of that world, still in the imagination. Observations of the real world do not come into play until after we have settled the shape of the imaginary world. We then can compare the two and determine whether the imaginary world became the real world and, if not, whether the reason is that a party breached by failing to perform its promise when due, without excuse or justification.
Resort to the conventions of language use within a practice is not unproblematic. Conventions sometimes run out of guidance, leaving a
50Id. at § 43.
51Id. at §§ 23–27.
52See § 1.1.1.
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dispute unresolved. Wittgenstein described the dynamics of a language as follows:
Our language can be seen as an ancient city: a maze of little streets and squares, of old and new houses, and of houses with additions from various periods; and this surrounded by a multitude of new boroughs with straight regular streets and uniform houses.53
Consequently, the conventions may be fractured in a case, as when one party knew of a trade usage and contracted in that light, while the other did not know and contracted in light of ordinary usage, producing a dispute. The parties then are engaged in different practices, possibly with different conventions of language use, which conventions may produce contradictory results. In the case of a fracture, the conventions might produce ambiguity.
Wittgenstein’s conventionalism nonetheless is objective contractual interpretation’s theory of meaning. It will not produce difficult disputes in many, many cases. This kind of interpretation identifies and resolves ambiguities on the basis of the contract’s objective context. Like Wittgenstein, it rejects the notion that the meaning of language is constituted by what a speaker or hearer, reader or writer, had in mind. Instead, a contract’s meaning is constituted by objective factors—the conventions of the practice in which the parties are engaged. An interpreter can use these conventions by considering the objective context to ascertain the meaning of contract language as used in that context. Accordingly, circumstances and purpose are essential. The objective circumstances at formation (including trade usages) provide the context of the use. The contract’s evident purpose indicates the relevant use. By contrast, the course of negotiations, a party’s statements of intention made in the course of negotiations, a party’s testimony as to its own past intentions, and any course of dealing bear on what a party probably had in mind. Suffice it to say here that Wittgenstein’s complex arguments against the possibility of a private language strongly dispute the relevance of such subjective elements to the contract’s meaning.54
When the dynamics of the relevant language make the conventions ambiguous and the meanings contradictory as applied in a case, objective contractual interpretation holds that the contract is ambiguous. It addresses
53WITTGENSTEIN, supra note 26, at § 18.
54See id. at § 243 et seq.; § 6.1.2.1 (discussion of Humpty Dumpty).