Pseudo-Contract and Shared Meaning Analysis

Abstract

Over the last several decades, courts and legal scholars have struggled with whether or when to consider boilerplate text as contract. Recent attempts to draw all boilerplate text into “contract” seek to end that struggle but have shifted contract law away from its traditional focus on enforcing parties’ actual agreements and common understandings. This has required a series of ad hoc “fixes” to contract law reminiscent of the medieval use of “epicycles” to try to square geocentric theories of planetary motion with recalcitrant observations of a nongeocentric universe. This shift has been transforming the meanings of contract law’s central concepts. We view the shift as an undiagnosed paradigm slip, resulting in a generalized theory of “contract” as a mere assumption of risk that allows private obligations to be created unilaterally without reaching the actual agreements required by core contract law principles. Some now call this new sort of obligation “contract.” But it is pseudo-contract, resembling contract without fulfilling its necessary conditions of validity.

The recent paradigm slip into pseudo-contract raises a complex blend of linguistic, factual, conceptual, practical, normative, and doctrinal problems. Under the mantle of “contract,” the problems of pseudo-contract have remained largely hidden. In this Article we expose these problems and develop a more nuanced and coherent method of analysis — shared meaning analysis — that courts and other legal analysts can use to determine when any particular piece of boilerplate text does, or does not, contribute an actual term to a contract.

Because facts about language have received insufficient attention in discussions of how boilerplate text may (or may not) contribute to contract meaning, we launch our analysis by developing several seminal insights into the dependence of meaning on social cooperation from the language philosopher Paul Grice. Drawing on his insights into language, we develop a contemporary definition of the shared meaning of a contract (or the “common meaning of the parties”) as that meaning that is most consistent with the presupposition that both parties were using language cooperatively to contract. We then offer a simple conceptual test that courts can use to discern this shared meaning, distinguish contractual from noncontractual uses of boilerplate text, and prevent contract from slipping into pseudo-contract. We pay particular attention to diagnosing deceptive or misleading uses of boilerplate text. Using examples ranging widely from clickwrap consumer contracts to high-end boilerplate contracts between sophisticated parties, we show how shared meaning analysis applies generally to many varieties of contract.

Keywords: boilerplate, pseudo-contract, arbitration, grice, contract, interpretation, objective theory, cooperation, market, paradigm slip, clickwrap, online, contract of adhesion, speaker meaning, sentence meaning, shared meaning, ISDA, pari passu, high-end boilerplate, deception, consumer

JEL Classification: K12, B15, B50, K10, K21, K23, K22, K41, K42, L41, L43, L44, L51, M38, N30, N31, N32, N82, 010, 014