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11/21/2017

Stephen Mouritsen: Objective Plain Meaning in Common Law Contracts
Michael Ramsey

Stephen C. Mouritsen (University of Chicago - Law School; Brigham Young University - J. Reuben Clark Law School) has posted Objective Plain Meaning in Common Law Contracts on SSRN.  Here is the abstract:

When called upon to interpret the undefined language of a common law contract, judges and lawyers have for centuries appealed to the so-called Plain Meaning Rule — a canon of contractual interpretation that states that if the language of the contract is clear and unambiguous, courts cannot consider extrinsic evidence.

This rule is often justified on the basis of objectivity and efficiency. If the parties have committed their agreement to a writing whose terms are plain, it would be unfair and wasteful to consider extra-contractual evidence of meaning. Recent scholarship has questioned the objectivity and efficiency of courts’ plain-meaning analysis. Contract interpretation, the argument goes, has become an inconsistent, unnecessarily complex, and unpredictable enterprise. The question then is how to fix it.

One recent proposal is to borrow the survey methodologies of trademark disputes. This is an attractive approach as it would introduce a measure of objectivity into the analysis of plain meaning. But survey methodologies can be costly and their results may be subject to a variety of response biases.

Another approach, the one advocated here, is to rely on data from corpus linguistics in making judgements about plain meaning and ambiguity in contracts. Like the survey method, corpus linguistics would introduce greater objectivity and predictability into the analysis of contractual meaning. Corpus linguistics draws its data from large, coded, electronic collections of natural text, meaning that the data relied upon in corpus linguistics is free of response bias. Moreover, data from linguistic corpora are freely available and, in many cases, easier to obtain than relevant survey data.

At bottom, I argue that the question of the plain meaning of the words of a contract is an empirical question that calls for an empirically based answer — an answer that is rooted in experimentation and observation and whose results are verifiable and falsifiable. Below I outline how corpus linguistic methods may be applied to the interpretation of contracts.

(Via Larry Solum at Legal Theory Blog, where it is "Download of the Week").