Lauren Henry Scholz (Florida State University – College of Law) has posted The Market for Interpretation and the Limits of Textualism on SSRN. Here is the abstract:
Many courts use textualist interpretation by default for contracts where both parties are deemed sophisticated. This default misaligns with both the heterogeneous preferences of sophisticated contracting parties and contract law’s plural value commitments. There are two competing theories about the purpose of default rules. One view has it that defaults should approximate what most parties would have wanted. The other sees defaults as tools for advancing the broader aims of law, including autonomy and welfarism. The current sophistication default fails under both views.
I contend that flipping the default rule for contract interpretation for sophisticated parties from textualism to contextualism would incentivize out-of-court dispute resolution, redistribute litigation burdens away from dominant firms, and better align interpretive practice with contract law’s goals. A contextualist default reflects the autonomy value of contract law, and makes society better off, supporting contract law’s welfarist commitment.
Highly recommended.