The Role of the Jury (and the Fact/Law Distinction) in the Interpretation of Written Contracts

Abstract

The interpretation of a written contract term is commonly considered a question of law and not left to the jury. This article examines that proposition from the perspective of principle, policy and empirical reality. The usual basis ascribed for drawing the fact/law distinction references the difference between particular and general decisions. If the decision impacts just the particular case, and does not set a precedent for future cases, then it is normally a question of fact. That would suggest that many interpretation questions raises issues of fact and should be sent to the jury. Yet the black letter law is to the contrary, unless the interpretation issues involve consideration of contested "extrinsic" evidence, such as evidence about pre-contract negotiations or usages of trade. The parole evidence rule (PER) determines when such evidence is relevant to interpretation issues, but the PER is very conflicted, with courts and commentators divided whether to follow a "hard" or "soft" parole evidence rule. The article then turns to grand policy considerations, such as respect for party autonomy, efficiency, and redistribution (or fairness) for guidance. It concludes that there are many arguments for treating interpretation issues as factual, unless one fears that jury decisions are based on factors other than those reflected in the judge's instructions. Jury scepticism probably accounts for many of the rules we have today, including advocacy for a "hard" PER and a plain meaning approach to the interpretation of written texts. Yet we no little empirically about how juries behave in contract cases, though we do know that a reasonably high percentage of contract cases go to the jury (commonly on issues other than interpretation). The article concludes with a discussion of Judge Richard Posner's proposed compromise solution to the hard v. soft debate about the PER (see AM International v. Graphic Management), distinguishing between objective and subjective extrinsic evidence. Arguing that this solution, though a reasonable one, is unlikely to have legs, the author concludes that we are destined for continued chaos or unpredictability in this area of the law.

Keywords: Legal Procedure, The Legal System, Illegal Behavior

JEL Classification: K40