Abstract
Written words and terms are of special importance in the law of contracts. This essay will review two articles dealing with why it is safer for contract parties to put it in writing. In addition how written contracts prevent the false consensus bias in contract understanding and interpretation.
Why written contracts are advantageous
Written words and terms are of special importance in the law of contracts. The acts and laws of fraud and deception need some contracts put in writing. Oral contract (parol) evidence omits prior or simultaneous understanding of an agreement if there is a document that includes the claims and purposes of the agreement (Solan, 2001). Salon (2001) thinks this is intended to introduce confidence and conviction to business deals and contracts and to restrict bringing unreliable evidence.
This essay aims to summarize the article of Solan (2001) where the author discussed whether parol evidence should be kept and how it should be applied in different circumstances. Further, the author discussed the results of dependence on written contracts. The second article to summarize is the essay discussion by Solan and others (2008) on the unreal or fictitious agreement bias in contract understanding and interpretation.
The written contract: How it provides safety and certainty
Solan (2001), argues that dependence on written contracts serves to decrease dishonesty, in theory, by limiting the chances of false statements under oath about one’s considerations of events that occurred before and concurrent to contracting. In practice, however, written contracts produce what Solan (2001) called a safe hold (harbor) against problematic business practices. Based on linguistic and psychological approaches, Solan (2001) argued that many perceptions of standard contracts are well established. Further, people usually forget what they said; therefore, written contracts provide advantageous purposes (Solan, 2001).
About parol (oral contract) evidence rule and its drives, Solan’s article (2001) can be divided into four parts. First, a brief discussion on parol evidence and its incentives, the author then (in part 2), looks closely at the stirring significance: the decrease of false statements, decreased dependence on human memory, and gaining the jury’s trust. The author inferred there still is a good reason to keep the parol evidence rule; however; this is not without problems. These are mainly the indistinct separation between forgetting and lying (perjury), the doubts that can be created by manipulating words that may occasionally mount to inaccurate testimony.
In the third part, the author discusses how written contracts are safe harbors to precise business practices. They allow the business to campaign for and deal out their products and services depending on an agreement the other party cannot claim that it was not read or understood. Finally, the author infers there is no much need to change the parol evidence rule, rather what it may produce of dishonest before contract representation, and possible false testimonies are what need to be strongly confronted and regulated.
Untrue agreement bias in contract understanding and interpretation
The tendency to consider one’s views are prime and principal while in fact, they are not is known in psychology as false (untrue) understanding (consensus) bias (Solan, Rosenblatt, and Osherson, 2008). This bias is a real problem in contracts especially if a dispute arises because of an event that may or may not fit in contract language. Solan and others experimented with the understanding of contracts’ language among different groups of people.
They found out that individuals understand contacts’ language differently because of the false consensus bias. This may create a problem for the decision-maker (a judge for example) as to recognizing the authenticity of both side’s interpretation of the contract. There are five principal ideas in the essay of Solan and others (2008). First is the summary of some legal principles that rule resolving the language uncertainty of contracts. The parol evidence rule allows the entry of external evidence to settle the uncertainty in contract language. However, it bans proposed evidence to change the terms of a clear language contract.
The authors stated that courts differ to a great extent as to the amount of investigation needed to decide a contract language is clear or not. However, contract terms that don’t carry more than one meaning are generally not denied by introducing external evidence. Further, the possibility of holding no contract in case parties do not share a common understanding is unaccepted as it is advantageous to the party upon whom the contract imposes a commitment.
The second principle part is a brief review of literature, which explains cases where the common understanding about a meaning disappears. Thirdly, the authors reviewed the literature on the term consensus bias. Fourthly, the authors describe two experimental examples from insurance contracts scenarios that prove lack of consensus as well as false consensus bias exist among laypeople and judges alike. They inferred the experience of false-consensus bias occurs in broad contractual circumstances and principles like the rule of lenity (where the court complies to the less harsh law reading), and the parol evidence rule should help the court to resolve contradictory issues because of the uncertainty of contract language. However, this depends mainly on deciding whether the language is uncertain (ambiguous) or not.
Conclusion
Written contracts provide safety and certainty to contract parties as they serve to decrease dishonesty by limiting the chances of false statements under oath about one’s considerations of events that occurred before and concurrent to contracting. The limitation of false-consensus bias of contract understanding and interpretation is of equal importance.
References
Solan, L., M. (2001). The Written Contract as Safe Harbor for Dishonest Conduct. Chicago-Kent Law Review, 77, 87-120.
Solan, L., Rosenblatt, T., and Osherson, D. (2008). Essay: False Consensus Bias in Contract Interpretation. Columbia Law Review, 108, 1268-1300.