TY  - JOUR
AU  - Shavell,Steven
TI  - On the Writing and the Interpretation of Contracts
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10094
PY  - 2003
Y2  - November 2003
UR  - http://www.nber.org/papers/w10094
L1  - http://www.nber.org/papers/w10094.pdf
N1  - Author contact info:
Steven Shavell
Harvard Law School
1575 Massachusetts Avenue
Hauser Hall 508
Cambridge, MA  02138
Tel: 617/495-3668
Fax: 617/496-2256
E-Mail: shavell@law.harvard.edu
AB  - The major theme of this article is that the interpretation of contracts -- their possible amplification, correction, and modification by adjudicators -- is in the interests of contracting parties. The general reasons are (a) that interpretation may improve on otherwise imperfect contracts; and (b) that the prospect of interpretation allows parties to write simpler contracts and thus to conserve on contracting effort. A method of interpretation is defined as a function whose argument is the written contract and whose value is another contract, the interpreted contract, which is what actually governs the parties' joint enterprise. It is shown that interpretation is superior to enforcement of contracts as written, and the optimal method of interpretation is analyzed.
ER  -