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Keywords

against the drafter; ambiguity; arbitration; business; California; canon of construction; canon of interpretation; commercial; consumer; contra proferentem; contracts; contracts of adhesion; data; Delaware; drafter; drafting; empirical; insurance; Lamps Plus; negotiation; New York; private ordering; private parties

Abstract

Contra proferentem, the enduring maxim that directs courts to interpret an ambiguity in a contract against its drafter, appears simple on its face. Although it might be best known as a fundamental principle of insurance law, contra proferentem figures in courts’ interpretation of a range of contract types. As an interpretive rule of thumb that parties can easily override with a simple contract provision, the doctrine and its boilerplate antidote seem to offer a straightforward means to facilitate private ordering—a central goal of contract law.

However, neither courts’ application of the doctrine in case law nor contract drafters’ treatment of the doctrine proves clear-cut. Courts persist in invoking the doctrine but do not necessarily apply it in consistent or clarifying ways. Is this a tool of equity or efficiency? Is it a tiebreaker of last resort or a first-order rule? Legal thinkers have debated the rationale behind the doctrine, with no single explanation providing a justification in every contract context. Thus, given the conceptual murkiness of the doctrine, and the risk that it may be enforced in unpredictable ways, we would expect commercial parties to make regular use of simple-to-implement provisions specifying the inapplicability of the doctrine. Notably, however, surprisingly little data have been available concerning how courts treat contra proferentem broadly and whether commercial parties choose to opt out of the rule.

This project provides empirical data that challenge conventional wisdom around the operation of contra proferentem. In doing so, it offers a theoretical and normative intervention, raising questions about the efficacy of the doctrine as a tool of private ordering. This study uses close readings of three paradigmatic jurisdictions—California, New York, and Delaware—and provides macro data on these and other states as well as federal courts. The findings challenge expectations that the doctrine primarily operates as a principle of equity. In addition, they suggest that contra proferentem often operates as an opaque discretionary tool in commercial contracts. The doctrine’s unpredictability, in turn, makes the relative dearth of opt-out boilerplate—including in sophisticated-party contracts—even more surprising.

In addition to providing novel data, this Article offers an explanation for the persistence and murkiness of the doctrine of contra proferentem. It suggests the doctrine endures because it aims to serve different objectives in different contract contexts, operating as an equitable tool in the context of adhesive consumer contracts and as a last-resort tiebreaker in commercial contracts. Yet the failure of courts to police these boundaries can lead to the blurring of the doctrine in the case law, an impediment to predictability and transparency essential to the private law. Moreover, this Article calls into question a premise of private ordering—the ability of sophisticated actors to use contracts to effectuate their preferences. As such, this study demonstrates the challenge to private ordering that results from a confluence of sticky contract doctrine and sticky contract gaps, threatening to undermine the predictability and efficacy of the common law for all.

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