Coase-Sandor Working Paper Series in Law and Economics

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Law & Economics Working Papers


Contract interpretation is an understudied topic in the economic analysis of contract law. This paper combines simple formal analysis of the tradeoffs involved in interpretation with applications to the principal doctrines of contract interpretation, including the "four corners" rule, mutual mistake, contra proferentum, and what I call the (informal but very important) rule of "extrinsic nonevidence." Gap filling is distinguished, and the relativity of interpretive doctrine to the interpretive medium—jurors, arbitrators, and judges in different kinds of judicial system—is emphasized.



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