The Real and the Paper Deal: Empirical Pictures of Relationships, Complexity and the Urge for Transparent Simple Rules
Assume that contract law matters, at least in some subset of all the situations where people consider making or do make contracts. Also assume that contract law should rest to a large extent on choice or responsibility for misleading others about one's choices. Making these assumptions, we must be concerned with how the legal system deals with the expectations of the parties. One approach is formal Judges can limit themselves to dealing with only the formal expressions of the parties the paper deal. They need ask only whether the parties signed or accepted a document, and if they did, what is the 'plain meaning' of the words they used Sometimes, writings labeled 'contract' do capture many if not most of the expectations of those who sign them. Often, however, the paper deal will not reflect the real deal: a writing can be inconsistent with the actual expectations of the parties. Courts frequently have sought to protect such actual expectations despite the presence of a writing that does not mention them or even one that is inconsistent with them. However establishing real expectations often is very difficult. Courts face what Richard Danzig has called 'the capability problem.'1 Some expectations, for example, are only tacit assumptions what I would have said if I had thought about a question that I did not think about. Even if the parties did have real expectations that they did not express in their written document, we must worry that today's testimony about them will be self-serving and fabricated to make the case come out the right way. Also, proving the real deal often will be very costly. The parties must convey a commercial context to a judge or to jurors. They may come to the task with little, if any, knowledge of the part of the business world in question. Experts can inform them, but experts are not free. If we want our courts to carry out the expectations of the parties to contracts, both those that they express in writing and those that are left unrecorded or even unspoken, we must accept a contract law that rests on standards rather than on clear, quantitative rules. Contract law then will talk of 'good faith', 'duties of cooperation', or 'within limits set by commercial reasonableness.'2 Others have written much about what standards are most appropriate.3