The Limits of Expanded Choice: An Analysis of the Interactions between Express and Implied Contract Terms
Although trade and its defining terms lie at the very core of contract law, perceptions of the state's involvement in the exchange process remain peculiarly incomplete. Everyone understands that the state supplies the fundamental property-defining rules for pre-trade endowments. For instance, governmentally provided rules of tort, nuisance, and civil rights establish basic boundaries of what initially belongs to an individual and, hence, what he has to offer in exchange. When an exchange subsequently takes place, however, the parties themselves assume an important part of the burden of communicating what rights are being given and received. Although the state's general rules of contract provide a set of standard gap-filling assumptions or implied terms, almost every agreement requires the parties to provide some additional individualized content. At one level, the private and state-supplied terms of an executory contract represent an attempted interparty communication of the substantive entitlements intended to be exchanged. Since, however; the terms communicate evidence of the exchange's content to the state as well, they also constitute the principal legal definition of the rights reallocation. Unfortunately, this definitional process requires parties to employ inherently error-prone signals – the "formulations" of their agreement. If the chosen combination of privately and publicly supplied terms results in an inappropriate formulation, a party may suffer a costly surprise when the contract is legally enforced. The disappointed party will frequently contend that the content of the contract, as ultimately interpreted, does not accurately describe the original intent or expectation.
Many such complaints about the misformulation or misinterpretation of an agreement are rooted in tensions between implied and express terms and between standard and unconventional forms of expression. To the extent that these tensions have been understood at all, the major attempt to harmonize them relies on what we term the Expanded Choice postulate. The postulate maintains that implied terms expand contractors' choices by providing standardized and widely suitable "preformulations," thus eliminating the cost of negotiating every detail of the proposed arrangement. This Expanded Choice thesis implicitly presumes a neutral policy toward individualized agreements: atypical parties lose nothing, since they remain unrestrained from designing customized provisions to replace the state-supplied terms.
Contracts | Law
Charles J. Goetz & Robert E. Scott,
The Limits of Expanded Choice: An Analysis of the Interactions between Express and Implied Contract Terms,
Calif. L. Rev.
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/398