FTA: "If it ever comes to a court case, one of the first things [sic] the judge is going to look at is community expectations and practice around our licenses. A jurist is supposed [sic] to do this in contract and license cases; there's some famous case law about the interpretation of handshake contracts among Hasidic Jewish diamond merchants in New York City that makes this very clear and explicit. Where there is doubt about interpretation and no overriding problem of of equity, the norms of the community within which the license/contract was arrived at should govern." [Emphasis added.]
The first two sentences of this quote are flat-out wrong and give false hope about the supposed willingness of (U.S.) courts to rescue people from "unfair" contracts. Only in the italicized part of the final sentence does ESR get it right, and even then only partly so.
1. In American law's protocol ("subroutine") for interpreting contract language, a judge will never get as far as looking at industry standards unless the judge first determines that the language is ambiguous, that is, capable of two or more plausible interpretations, and that evidence of industry standards can be helpful in resolving the ambiguity.
2. "Equity" generally doesn't enter into contract interpretation or enforcement, at least in U.S. law. The normal governing principle here is "freedom of contract" — as in, you're free to make a really dumb deal, and (with rare exceptions such as "unconscionability") the court won't rewrite the contract for you just because you come to regret having entered into it.
3. If the judge does get as far as taking industry standards into account, then: (A) Evidence of just what those standards are will need to be presented; (B) the finder of fact — possibly the jury — might have to weigh the evidence and "decide" what those industry standards are, for purposes of deciding the case; and (C) the industry standards won't necessarily be controlling in any case.
Source: I teach business-contract drafting as a part-time law professor; my relevant course materials, with links to additional reading, are at https://toedtclassnotes.site44.com/#AmbigTop
Thank you for this. The claim that community expectations are relevant in the face of a clearly-written contract sounded bizarre to me, but it's nice to have some actually informed confirmation.
As an aside, do you know what case law he's talking about with the diamond merchants?
Not only can I not find any such "famous case law" with a quick search, I'm instead finding articles like this which specifically claim those handshake contracts aren't enforceable, and analyze how they function in the absence of legal protection: https://scholarship.law.duke.edu/cgi/viewcontent.cgi?referer...
The first two sentences of this quote are flat-out wrong and give false hope about the supposed willingness of (U.S.) courts to rescue people from "unfair" contracts. Only in the italicized part of the final sentence does ESR get it right, and even then only partly so.
1. In American law's protocol ("subroutine") for interpreting contract language, a judge will never get as far as looking at industry standards unless the judge first determines that the language is ambiguous, that is, capable of two or more plausible interpretations, and that evidence of industry standards can be helpful in resolving the ambiguity.
2. "Equity" generally doesn't enter into contract interpretation or enforcement, at least in U.S. law. The normal governing principle here is "freedom of contract" — as in, you're free to make a really dumb deal, and (with rare exceptions such as "unconscionability") the court won't rewrite the contract for you just because you come to regret having entered into it.
3. If the judge does get as far as taking industry standards into account, then: (A) Evidence of just what those standards are will need to be presented; (B) the finder of fact — possibly the jury — might have to weigh the evidence and "decide" what those industry standards are, for purposes of deciding the case; and (C) the industry standards won't necessarily be controlling in any case.
Source: I teach business-contract drafting as a part-time law professor; my relevant course materials, with links to additional reading, are at https://toedtclassnotes.site44.com/#AmbigTop