Hermeneutics and Contract Default Rules: An Essay on Lieber and Corbin

Abstract

The most provocative debate in contemporary contract law scholarship concerns default rule analysis or the manner in which courts fill gaps in incomplete contracts. The nineteenth-century scholar Francis Lieber elaborated a comprehensive solution to the default rules puzzle by first distinguishing the judicial acts of contract interpretation and construction, and then by developing principles of construction with which to choose default rules. Arthur Corbin knew about Lieber's enterprise, but, in his treatise on contracts, dismissed Lieber's distinction and never explored the rest of Lieber's hermeneutics. Had Corbin addressed Lieber, much of the professorial energy expended in the prevailing default rules debate might have been conserved.

Although Lieber's work was rather limited with respect to the law of contracts, his principles of construction provide an analytical framework with which to understand and guide the way judges choose rules that conflict with the intentions of parties in contract disputes. Because Lieber's principles constitute foundational ideas, a return to them may be both efficient in conserving intellectual energy and profitable in providing fresh insights into the problems to which the ideas apply. By reviewing the distinction between interpretation and construction as Corbin adapted it from Lieber in Part I and then showing how Lieber's principles of construction bear directly on the prevailing default rules debate in Part II, this Essay invites a return to those foundational ideas and the addition of hermeneutics to the default rules debate. This essay's discussion of Lieber's hermeneutics - adapted for contract law according to Corbin's distinction between interpretation and construction - is tentative and general. It recognizes a potential intellectual debt owed to Lieber, who has been a neglected figure in contemporary American legal thought. And while Corbin has been treated as the legal academy's equivalent of royalty, even his distinction between interpretation and construction has been underappreciated.

Keywords: contract law, default rule analysis, Francis Lieber, Arthur Corbin, hermeneutics, principles of construction

JEL Classification: K12