On the Writing and the Interpretation of Contracts

Shavell, Steven

On the Writing and the Interpretation of Contracts

No 10094, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The major theme of this article is that the interpretation of contracts -- their possible amplification, correction, and modification by adjudicators -- is in the interests of contracting parties. The general reasons are (a) that interpretation may improve on otherwise imperfect contracts; and (b) that the prospect of interpretation allows parties to write simpler contracts and thus to conserve on contracting effort. A method of interpretation is defined as a function whose argument is the written contract and whose value is another contract, the interpreted contract, which is what actually governs the parties' joint enterprise. It is shown that interpretation is superior to enforcement of contracts as written, and the optimal method of interpretation is analyzed.

JEL-codes: D00 D8 (search for similar items in EconPapers)
Date: 2003-11
New Economics Papers: this item is included in nep-cdm and nep-com
Note: LE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published as Shavell, Steven. "On The Writing and The Interpretation Of Contracts," Journal of Law, Economics and Organization, 2006, v22(2,Oct), 289-314.

Downloads: (external link)
http://www.nber.org/papers/w10094.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:10094

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w10094

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().