Chapman Law Review


Contract interpretation is one of the most important topics in commercial law. Unfortunately, the law of interpretation is extraordinarily convoluted. In essentially every American state, the jurisprudence is riddled with inconsistency and ambiguity. This causes multiple problems. Contracting parties are forced to expend additional resources when negotiating and drafting agreements. Disputes over contractual meaning are more likely to end up in litigation. And courts make a greater number of errors in the interpretive process. Together, these impacts result in significant unfairness and undermine economic efficiency. Efforts to remedy the doctrinal incoherence are thus warranted. The goal of this Article is to clarify various legal concepts and principles that play a critical role in the interpretation caselaw and secondary literature. By untying some of the knots that entangle contract interpretation and the parol evidence rule, the Article will aid judges, lawyers, and professors in addressing interpretive issues in the contexts of adjudication, contract drafting, scholarship, and teaching. This Article addresses the following seven issues: (1) the two types of latent ambiguity; (2) the many definitions of “parol evidence”; (3) the stages of contract interpretation; (4) determining whether a court is using textualism or contextualism; (5) contextualism and the ambiguity determination; (6) the circumstances in which contract interpretation raises a jury question; and (7) contextualism and the parol evidence rule.



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