A Theory of Interpretation in The Realm of Idealism

DePaul Business and Commercial
Law Journal
Volume 5 Article 3
Issue 1 Fall 2006
A Theory of Interpretation in the Realm of Idealism

Larry A. DiMatteo
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Larry A. DiMatteo, A Theory of Interpretation in the Realm of Idealism, 5 DePaul Bus. & Com. L.J. 17
(2006)
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A Theory of Interpretation in the Realm of Idealism
Larry A. DiMatteo*
I. INTRODUCTION
Karl Llewellyn' is famous for numerous accomplishments, including

naming and nourishing the legal realist movement of the 1930s,2
3
authoring the first major American work on law and anthropology,
critiquing legal education, 4 and being the architect of America's great-
5
est work of codification-the Uniform Commercial Code (Code).
His work also informed law at a most fundamental level-that of in-
* Larry A. DiMatteo, Huber Hurst Professor of Contract Law, Warrington College of Busi-
ness Administration, University of Florida, J.D., Cornell Law School, LL.M., Harvard Law
School. I would like to thank the participants of the 2004 Hurst Legal Research Seminar co-
sponsored by the Wharton School and the Warrington College of Business. I would also like to
thank my Contract Theory class at the University of Florida's Levin College of Law for their
helpful comments on an earlier draft of this article.
1. Karl N. Llewellyn (1893-1962), after a few years at Yale, joined the faculty at Columbia in
1925 and remained until 1951, when he joined the faculty at Chicago. See Soia Mentschikoff,
Karl N. Llewellyn, 9 INT'L ENCYCLOPEDIA Soc. Sci. 440, 440 (1968).
2. Karl N. Llewellyn, A RealisticJurisprudence-TheNext Step, 30 COLUM. L. REv.431 (1930)
[hereinafter Realistic Jurisprudence]; Karl N. Llewellyn, Some Realism About Realism-Re-
sponding to Dean Pound, 44 HARV. L. REV. 1222 (1931) [hereinafter Some Realism]. See gener-
ally WILLIAM TWINING, KARL LLEWELLYN AND THE REALIST MOVEMENT (1973) [hereinafter
TWINING, THE REALIST MOVEMENT]; AMERICAN LEGAL REALISM (William W. Fisher III, Mor-
ton J. Horwitz & Thomas A. Reed eds. 1993) [hereinafter AMERICAN LEGAL REALISM]; LAURA
KALMAN, LEGAL REALISM AT YALE: 1927-1960 (1986); Joseph W. Singer, Legal Realism Now,
76 CAL. L. REV. 465 (1988); Edward A. Purcell, Jr., American JurisprudenceBetween the Wars:
Legal Realism and the Crisis of Democratic Theory, 75 AM. HIST. REV. 424 (1969).
3. KARL N. LLEWELLYN & E. ADAM HOEBEL, THE CHEYENNE WAY: CONFLICT AND CASE
LAW IN PRIMITIVE JURISPRUDENCE (1941) [hereinafter THE CHEYENNE WAY].
4. Karl N. Llewellyn, On What is Wrong with So-Called Legal Education, 35 COLUM. L. REV.
651 (1935).
5. Llewellyn was the Chief Reporter for the Uniform Commercial Code and the principal
drafter of Articles 1 (General Provisions) and 2 (Sales). His wife, Soia Mentschikoff, served as
Associate Chief Reporter. Llewellyn was initially interested to draft a new sales act by the end
of the 1930s but soon realized that a more expansive code of commercial law was needed. See
Karl N. Llewellyn, The Needed Federal Sales Act, 26 VA. L. REV. 558, 564 (1940). In 1940, Llew-
ellyn accepted William Schnader's invitation to become the Chief Reporter of the new Uniform
Commercial Code. See generally William Schnader, A Short History of the Preparationand En-
actment of the Uniform Commercial Code, 22 U. MIAMI L. REV. 1 (1967). Grant Gilmore pro-
vided the strongest statement of Llewellyn's role in drafting the Code. "[Tihis Code was
Llewellyn's Code; there is not a section, there is hardly a line, which does not bear his stamp and
impress; from the beginning to end he inspired, directed, and controlled it." Grant Gilmore, In
Memoriam: Karl Llewellyn, 71 YALE L.J. 813, 814 (1962).
18 DEPAUL BUSINESS & COMMERCIAL LAW JOURNAL [Vol. 5:17
terpretation. 6 His enormous body of work provides a rich literature in

such areas as contract law, 7 commercial law, 8 jurisprudence, 9 and legal
sociology. 10 From this body of work a dual track theory of interpreta-
tion" becomes evident. It is a theory of interpretation in which one
track is firmly embedded in the factual world and the other in the
conceptual world. The dual track theory will be more closely ex-
amined here as applied to contract law.
Llewellyn's most famous innovations are found on the factual side.
Llewellyn ably developed the factual-contextual side of the dual track
with his focus on fact sensitivity, 12 situation sense, 13 transaction-
types,1 4 and the importance of contextualism in the interpretation of
rules and contracts. 15 The shortcomings of his approach to rule and
contract interpretation are found on the conceptual side. For that rea-
son, the writings of Ronald Dworkin 16 will be mined to fuller develop
the dual track theory of interpretation.
6. Llewellyn's theory of interpretation can be surmised from all of his writings and is the
primary subject of this Part. But see Karl N. Llewellyn, Remarks on the Theory of Appellate
Decision and the Rules or Canons about How Statutes are to be Construed, 3 VAND. L. REV. 395,
400 (1950). See generally John M. Breen, Statutory Interpretationand the Lessons of Llewellyn,
33 Loy. L.A. L. REV. 263, 285 (2000).
7. Karl N. Llewellyn, What Price Contract?-An Essay in Perspective, 40 YALE L.J. 704
(1931); Karl N. Llewellyn, The Rule of Law in Our Case-Law of Contract, 47 YALE L.J. 1243
(1938) [hereinafter Rule of Law]; Karl N. Llewellyn, Our Case Law of Contract-Offer and
Acceptance (Part 2), 48 YALE L.J. 779 (1939).
8. See Karl N. Llewellyn, CIF.Contracts in American Law, 32 YALE L.J. 711 (1923); Karl N.
Llewellyn, On Warranty of Quality and Society, 36 COLUM. L. REV. 699 (1936); Karl N. Llewel-
lyn, On Warranty of Quality and Society: 11, 37 COLUM. L. REV. 341 (1937); Karl N. Llewellyn,
Through Title to Contractand A Bit Beyond, 15 N.Y.U. L. 0. REV. 159 (1938); Karl N. Llewel-
lyn, The FirstStruggle to Unhorse Sales, 52 HARV. L. REV. 873 (1939); Karl N. Llewellyn, Across
Sales on Horseback, 52 HARV. L. REV. 725 (1939).
9. See Karl N. Llewellyn, The Theory of Legal "Science", 20 N.C. L. REV. 1 (1942); KARL N.
LLEWELLYN, THE COMMON LAW TRADITION (1960) [hereinafter COMMON LAW TRADITION];
KARL N. LLEWELLYN, JURISPRUDENCE: REALISM IN THEORY AND PRACTICE (1962) [hereinaf-
ter JURISPRUDENCE].
10. See Karl N. Llewellyn, The Normative, the Legal and the Law-Jobs: The Problem of Juris-
tic Method, 49 YALE L.J. 1355 (1940).
11. Larry A. DiMatteo, Reason and Context: A Dual Track Theory of Interpretation, 109
PENN. STATE L. REV. 397 (2004) [hereinafter Reason and Context].
12. See infra Part II.C. (type-facts).

13. Id.
14. Id.
15. For an explanation of these facets of Llewellyn's jurisprudence and theory of interpreta-
tion see Reason and Context, supra note 11, at 446-458.
16. See Ronald Dworkin, Hard Cases, 88 HARV. L. REV. 1057 (1975); Ronald Dworkin, Law
as Interpretation,60 TEX. L. REV. 527 (1981); RONALD DWORKIN, LAW'S EMPIRE (1986); RON-
ALD DWORKIN, A MATI-ER OF PRINCIPLE (1985).
2006] THEORY OF INTERPRETATION
The conceptual side of the Liewellynian theory of interpretation

was embodied in the singing rule.17 The key component of Llewel-
lyn's singling rule was the provision of the patent reason for the rule's
existence on its face. It is through this patent reason that the rule's
application is to be guided. In this way, the rule provides its own self-
adjustment mechanism in its application to novel fact patterns. Llew-
ellyn's conceptual track also includes general or meta-principles. For
example, the meta-principles found in Articles 1 and 2 of the Code
include good faith, 18 fair dealing,1 9 unconscionability, 20 and impracti-
cability. 2 1 These principles or standards act as residual categories22 to
provide the needed flexibility for a rule-based system of law. They are
brought into service to prevent injustice produced by formal rule ap-
plication; they also can be used to fill in gaps in the formal conceptual
system or to mediate conflicts between different rule applications. It
is in this area that Dworkin's theory of interpretation can provide ad-
ditional support.
Llewellyn and Dworkin are both idealists in that their works sup-
port the belief in the internal integrity of the law and its ability to
provide determinate answers to legal disputes. 23 Together their
works provide a rich idealist statement of the power of law as a ra-
tional, determinate vehicle for fairness and justice. The strengths of
both jurisprudes-Llewellyn's contextual-based rule application and
Dworkin's conceptual theory building-provide the means for con-
structing a theory of interpretation. Dialectical conceptualism is the
name used to characterize this combined theory of interpretation.
17. See infra Part II.E.

18. UCC § 1-102 (2004).
19. Id.
20. UCC § 2-302 (1998).
21. UCC § 2-615 (1998).
22. T. PARSONS, THE STRUCTURE OF SOCIAL AcrION 17 (1937).
23. Llewellyn's designation as an idealist has been demarcated in the legal literature by the
reference to the "later Llewellyn." Llewellyn scholars have divided his work between his more
radical writings during the realist era and the "later Llewellyn" representing his time as reporter
of the Code and moderate idealism. A Japanese scholar compared "the young realist Llewellyn
in his 30's [as] criticising lawmen" with the "Llewellyn in The Common Law Tradition.... The
one is a lucid realist, while the other is a mystical idealist." Takeo Hayakawa, Karl N. Llewellyn
as a Lawman from Japan Sees Him, 18 RUTGERS L. REV. 717, 733 (1964). See also WILFRID E.
RUMBLE, JR., AMERICAN LEGAL REALISM: SKEPTICISM, REFORM, AND THE JUDICIAL PROCESS
(1968) (distinguishing between the "early approach of Llewellyn" and the "later approach of
Llewellyn"). Martin Golding describes the two facets of Llewellynian thought: "I suspect,
though, that Llewellyn became friendlier toward rules as time went on; the leading spirit behind
the Uniform Commercial Code could hardly be a rule denier." Martin P. Golding, Jurisprudence
and legal Philosophy in the Twentieth-Century America-Major Themes and Developments, 36 J.
LEGAL EDUC.441, 472 (1986). Golding asserts, reasonably so, that Llewellyn was never a true
rule skeptic.
The phrase acknowledges that law is a conceptual system that at times

will be contradicted by the facts of life (novel cases). A legal concept
or rule acts as an idea or synthesis that provides a resolution to a real
world dispute. Llewellyn's contextualism sees evolving commercial
practice as often providing a contradiction to idealized rule applica-
tion. In the dual track system of interpretation real world facts, at
times, are configured into new transaction-types. 24 These transaction-
types act as an antithesis that are combined into the conceptual ideal
through rule adjustment or rule creation. Llewellyn saw the old "pa-
per rules ' 25 of classical contract law as a barrier to the necessary in-
terplay between ideal and fact. Thus, the rules of law, should be
structured to allow for the systematic resolution of the continuing con-
tradiction between fixed rules and a dynamic social-economic reality.
This article will frame a reasonable representation of an idealist'
theory of interpretation in the realm of contract law. Part I begins
with a review of the general tenets of classical contract law. This is
required in order to understand the role of rules and contextualism as
envisioned by Llewellyn. Part II examines the role of rules and princi-
ples in Llewellynian jurisprudence. It examines Llewellyn's view of
the interlocking concepts of situation-sense, public/private distinction,
objective/subjective theory of contracts, and the role of formality in
contract law. It also argues that this vision embodied in contextualism
directly affected the evolution of contract doctrine. Part III introduces
the concept of contract law as an exercise in theory building. This
Part analyzes the law as interpretation insights of Dworkin most rele-
vant to Llewellyn's dual track theory of interpretation. Part IV draws
from the analysis of the earlier Parts in developing dialectical concep-
tualism as a theory of contract law interpretation.
It is important to note what this article is not. It does not critique
idealism as a functional legal order. That has been done, 26 and will
continue to be done by other scholars. This article is an attempt to
24. See infra Part II.C.

25. See Realistic Jurisprudence,supra note 2; Some Realism, supra note 2. In the first para-
graph of the later article he frames the issue as follows: "Are some rules mere paper?"
26. See, e.g., Duncan Kennedy, The Stages of the Decline of the PublicdPrivateDistinction,130
U. PA. L. REV. 1349 (1982) (arbitrariness of public-private distinction); Duncan Kennedy, Dis-
tributive and PaternalistMotives in Contract and Tort Law, with Special Reference to Compulsory
Terms and Unequal BargainingPower, 41 MD. L. REV.563 (1982); Duncan Kennedy, Form and
Substance in Private Law Adjudication, 89 HARV. L. REV. 1685 (1976) [hereinafter Kennedy,
Form and Substance]; Robert Hale, Coercion and Distribution in a Supposedly Noncoercive
State, 38 POL. Sci. Q. 470 (1923) (all law is coercive with distributional consequences) [hereinaf-
ter Hale, Coercion and Distribution];Felix Cohen, Transcendental Nonsense and the Functional
Approach, 35 COLUM. L. REV. 809 (1935).
restate a version of idealism originally offered by one of America's

great jurisprudes-Karl N. Llewellyn.
II. FIRST CITADEL OF IDEALISM: CLASSICAL CONTRACT THEORY
Classical contract theory refers to the brand of abstract conceptual-

ism or legal formalism that characterized the law from the latter part
of the Nineteenth Century through the early part of the Twentieth
Century. 27 Abstract conceptualism was characterized by formal rule
application, a purely deductive reasoning from general principles, and
a textual-only focus brand of contract interpretation. This way of
thinking about law was a component of what has been branded as
classical legal thought.28 This variety of abstract conceptualism is gen-
erally associated with the works of Christopher Columbus Langdell, 29
Joseph Beale, 30 and Samuel Williston.3 1 In the area of contract inter-
pretation this brand of conceptualism 32 was characterized by the for-
mulaic application of fixed rules and the plain meaning interpretation
of contracts. The role of contextual evidence was minimized through
the plain meaning or literal interpretation of written contracts. For
the abstract conceptualist, contract law was a dense and gapless body
of rules and principles that internally (through deduction) provided
answers to all real world disputes. It was this vein of classical legal
thought, and for our purposes, classical contract law, that Llewellyn
and the legal realists criticized. 33
27. See Reason and Context, supra note 11, at 6-8 and 20-29 (explaining the major tenets of
classical contract law and abstract conceptualism).
28. Classical legal thought refers to the style of judicial reasoning that characterized the pe-
riod from about 1875 to 1940. It has also been labeled as formalism and more pejoratively as
"mechanical jurisprudence." See Roscoe Pound, The Need of a Sociological Jurisprudence, 19
THE GREEN BAG 607 (1907); Roscoe Pound, Mechanical Jurisprudence,8 COLUM. L. REv.605
(1908) [hereinafter Pound, MechanicalJurisprudence];Roscoe Pound, The Scope and Purpose of
Sociological Jurisprudence (pts. 1-3), 24 HARV. L. REV. 591 (1911) and 25 HARV. L. REV. 140
and 489 (1912). Duncan Kennedy in discussing the concept of legal formalism in American law
states: "the critical use of the term formalism, against the abuse of deduction and the fantasy of
gaplessness in legal discourse, is part of the twentieth century battle between those who have
wanted to depoliticize the drama as much as possible, through reason, and those who have seen
it as inevitably a dangerous improvisation." Duncan Kennedy, Legal Formalism 13(Jan. 1, 2001)
(unpublished manuscript, on file with author) [hereinafter Kennedy, Legal Formalism].
29. CHRISTOPHER C. LANGDELL, A SELECTION OF CASES ON THE LAW OF CONTRACTS (1871).
30. JOSEPH H. BEALE, A TREATISE ON THE CONFLICT OF LAWS (1935); Joseph H. Beale,
Notes on Consideration, 17 HARV. L. REV. 71 (1903).
31. SAMUEL W. WILLISTON, TREATISE ON THE LAW OF CONTRACTS (1920).
32. See generally Grant Gilnore, Formalism and the Law of Negotiable Instruments, 13
CREIGHTON L. REV. 441 (1979).
33. See, e.g., Realistic Jurisprudence, supra note 2; Some Realism, supra note 2.
The "early Llewellyn, ' '34 was labeled as a rule skeptic due to his
work as a legal realist. This is misplaced because the notion of the
singing rule 35 and the importance of contextualism 36 in the interpreta-
tion of rules were evidenced in his commercial and contract writings
of the same era. Llewellyn's famous adage of legal indeterminacy,
that for every rule a counterrule 37 needs to be set in context. He be-
lieved that commercial rules, symbolized by the Uniform Sales Act,
had fallen out of step with the times and that because of the purely
38
deductive nature of judicial reasoning had become indeterminate.
This was the reason he shifted focus from revising the Sales Act to
promoting a further reaching uniform commercial code.
Llewellyn's "legal realist" jurisprudence also needs to be put in the
context of his commercial and contract scholarship. His early work as
a jurisprude, lead to the charge that he was a rule skeptic and an ethi-
cal relativist, or worst a nihilist.39 His commercial and contract schol-
arship work demonstrated his strong belief in the common law system
and the power of rules. He saw indeterminacy as being minimized
through grand-style judging, 40 institutional morality, 41 and craft
skills. 42 His rule skepticism was centered on the closed, fixed paper
rules of the time. His acceptance of the code project demonstrated his
belief that rules could be made to work or, in his case, to sing. The
right kind of rules would be able to overcome the indeterminacy in-
34. See supra note 23 (description of "later Llewellyn").

36. See infra Parts IV.A.1. and 2.
37. Llewellyn stated that "in our legal system we have large numbers of mutually inconsistent
major premises available for choice: 'competing' rules, 'competing' principles, 'competing' anal-
ogies .... " COMMON LAW TRADITION, supra note 9, at 12. Llewellyn lists as one of the Realists'
tenets the: "[d]istrust of traditional rules and concepts insofar as they purport to describe what
either courts or people are actually doing." Some Realism, supra note 2, at 1237.
38. Llewellyn asserted that: "at no time should law lose contact with its people in their daily
affairs; but at this time [1940] the lost contact [between the Uniform Sales Act of 1906 and
commercial practice] has become vital to regain." REPORT AND SECOND DRAFT: THE REVISED
UNIFORM SALES Acr (1941). Llewellyn not only advocated replacing the Uniform Sales Act he
also recommended a Federal Sales Act for international transactions. See Karl N. Llewellyn,
The Needed Federal Sales Act, 26 VA. L. REV. 558 (1940). Llewellyn's vision came into exis-
tence with the United States' adoption in 1988 of the Convention for the International Sale of
Goods.
39. See Realistic Jurisprudence,supra note 2; Some Realism, supra note 2.
40. See Karl N. Llewellyn, On the Current Recapture of the Grand Tradition, 9 U. CHI. L. S.
REC. 6 (1960), reproduced in JURISPRUDENCE, supra note 9, at 225-229.
41. See "Group Decision," "Judicial Security and Honesty," "A Known Bench," "Professional
Judicial Office," "Horse Sense on Steadying and Depersonalizing," in COMMON LAW TRADI-
TION, supra note 9, at 31-35, 45-51, 53.
42. Karl N. Llewellyn, The Crafts of Law Re-Valued, 15 ROCKY MT. L. REV. 1 (1942), repro-
duced in Jurisprudence, supra note 9, at 316-322; COMMON LAW TRADITION, supra note 9, at 213-
235 ("Appellate Judging as a Craft of Law").
herent in the old abstract, lump-wise rules. 43 His rules would allow
the free flow of commercial-social reality into rule application. In this
way, the rules would be constantly replenished and provide reck-
onability (determinacy).44
The formal application of paper rules was supported by a number of
the tenets of classical legal thought. The tenets, often attacked by the
realists, include the public-private distinction, objective-subjective
theories of contract, fact-law distinction, and the role of formality in
the legal order. These tenets and their critiques are explored in the
following sections.
A. The Public-PrivateDistinction
The public-private distinction was a feature of the apparatus of ab-

stract conceptualism. 4 5 The classical demarcation of public and private
law was foisted upon the foundation of separate spheres of absolute
43. See Karl N. Llewellyn, On Warranty of Quality and Society, 36 COLUM. L. REV. 699
(1936); Karl N. Llewellyn, On Warranty of Quality and Society: 1!, 37 COLUM. L. REV. 341
(1937). These two articles discuss the need to "delump" the caveat emptor doctrine which was
appropriate for the factorage industry of the early and mid-19th Century and the need for im-
plied warranties for distance sales. See also, Karl N. Llewellyn, Through Title to Contract and A
Bit Beyond, 15 N.Y.U. L. Q. REV. 159 (1938); Karl N. Llewellyn, The First Struggle to Unhorse
Sales, 52 HARV. L. REV. 873 (1939); Karl N. Llewellyn, Across Sales on Horseback, 52 HARV. L.
REV. 725 (1939). These articles argued for the need to delump risk of loss form the transfer of
title (separate the risk of loss determination from the exchange of formal title).
44. See COMMON LAW TRADITION, supra note 9, at 178-199 ("Reckonability of Result: The-
ory of Rules").
45. The U.S. Supreme Court had this to say about the distinction between public and private
rights: "It is often convenient to describe particular claims as invoking public or private rights,
and this handy classification is doubtless valid for some purposes. But usually the real signifi-
cance and legal consequence of each term will depend upon its context and the nature of the
interests it is invoked to distinguish." Garner v. Teamsters Union, 346 U.S. 485, 494 (1953). The
public nature of contract law is not a new revelation. The classic treatise writer Frederick Pol-
lock opens his treatise on contract law as follows: "The law of Contract may be described as the
endeavour of the State... to establish a positive sanction for the expectation of good faith which
has grown up in the mutual dealings of men of average right-mindedness." FREDERICK POL-
LOCK, PRINCIPLES OF CONTRACT AT LAW AND EQUITY 1 (6th ed. 1894). See generally Duncan
Kennedy, The Stages of the Decline of the Public/PrivateDistinction, 130 U. PA. L. REV. 1349
(1982) ("loopification of the public/private distinction"); Morton J. Horwitz, The History of the
Public/PrivateDistinction, 130 U. PA. L. REV. 1423, 1424 (1982) ("The emergence of the market
as a central legitimating institution brought the public/private distinction into the core of legal
discourse during the nineteenth century."). From 1905 (Lochner decision) to the 1930's (Realist
movement) legal thinkers "devoted their energies to exposing the conservative ideological foun-
dations of the public/private distinction." Id. at 1426. See, e.g., Hale, Coercion and Distribution,
supra note 25 (all law is coercive with distributional consequences); Morris R. Cohen, The Basis
of Contract,46 HARV. L. REV. 553 (1933); Morris R. Cohen, Property and Sovereignty, 13 COR-
NELL L.Q. 8 (1927).
power. 46 In this classification scheme, contract law was firmly placed
within the core of the private side of the distinction. Under classical
legal thought freedom of contract provided protection against govern-
mental intrusion into this purely private realm. The privatization of
contract law was laid upon the foundation of the will theory of con-
tract. The task of the courts was to simply enforce the will of the
contracting parties. Any judicial intervention in the cause of substan-
tive fairness was to be considered an impermissible substitution of ju-
dicial will for private will.
1. Will Theory and the Purification of Contract Doctrine
The will theory's claim that contractual obligation was the sole do-
main of the private sphere led to the transformation of the notion of
intent. The doctrine of implied intent, beginning with Lord Mans-
field, 4 7 was reconstituted from an amalgamation of individual intent,
community morality, and commercial practice to one solely devoted
to the creation of private will. Under pre-classical or Grand Style le-
gal thought "the process of implication of intent [was] based on rea-
sonableness within the context of the basic social-legal
relationships. ' 48 It is here where the affinity of Llewellyn's contextu-
alism for the Grand Style of legal thought is apparent. "Implied intent
permitted the same kind of reference to ideals and usage without the
abandonment of the claim that the obligations imposed had been vol-
untarily assumed. '49 The substitution of the will theory for the pre-
classical notion of intention resulted in the narrowing of implied in-
tent from the implication of reasonableness to the uncovering of abso-
lute will.
In order to establish the will paradigm, contract law had to be puri-
fied of its non-will dimensions. This process of disaggregation 5o began
with the "de-lumping" of implied-in-fact contracts from implied-in-
law. 51 The implied-in-law contracts were spun off into a separate
body of law as confirmed by Keener's 1893 treatise The Law of Quasi-
46. Duncan Kennedy, The Rise and Fall of ClassicalLegal Thought 12-14, 163 (1975) (unpub-
lished manuscript, on file with author) [hereinafter Kennedy, Classical Legal Thought].
47. Id. at 164-65.
48. Id. at 175.
49. Id.
50. Professor Horwitz coins the phrase "desegregation of concepts" in relation to the removal
of quasi-contract from the domain of contract. MORTON J. HORWlTZ, THE TRANSFORMATION OF
AMERICAN LAW 1870-1960 37 (1992).
51. Kennedy, ClassicalLegal Thought, supra note 67, at 178.
20061 THEORY OF INTERPRETATION
Contract.52 The reception of Keener's analysis into the law opened

the floodgates of disaggregation. This included the rise of tort law
totally disengaged from contract law and the creation of specialized
bodies of contract law-employment law, family law, and to a lesser
extent, sales law. This purification process also served to isolate prom-
issory estoppel to an extraordinary device at the periphery of the con-
sideration doctrine. A consequence of the disaggregation process was
the retarding of the expansion of charitable and business subscrip-
tions, revocable land licenses, and gift promises to the realm of the sui
53
generis.
The shift to the will theory also worked toward internal doctrinal
purification. The most far reaching was the "undermining and even-
tual rejection of the idea of 'status' . . . as [an] operative source of the
great mass of contract rules."'54 If status impacted the operation of
contract rights and duties, then judicial intervention to imply commu-
nity or public standards of conduct could not be de-legitimated. Thus,
status needed to be purged from contract law. The bolstering of the
employment-at-will doctrine and the constitutionalizing of freedom of
contract to block legislative intervention helped in the purification
process. The early Formalists-Langdell, Pollock, Anson-re-scripted
contract doctrine through the prism of the will theory. 5 5 Through the
elevation of abstraction, represented by the will theory, they were
able to expunge quasi-contract, status, and tort from contract law. 56
After cleansing contract doctrine of the impurities of status, im-
plied-in-law interventionism, and tort-like influences, contract law was
able to sever itself from the contextual elements connected to the
spun off areas of law. Instead, the only relevant issue was whether a
contract had been created through the sole exercise of individual
will. 57 If no such contract by will is formed, then the court is not to
salvage one based on a vague sense of general intent. In pre-classical
law, the salvage effort was possible through implication from status or
transaction type. Instead, the surrogates of the will theory-the con-
sideration doctrine and the requirement of definiteness of terms-
52. KEENER, TREATISE ON THE LAW OF QUASI-CONTRACTS (1893), as discussed in Kennedy,

Classical Legal Thought, supra note 46, at 180-181.
53. See DIMATITEO, LARRY A., PRENTICE, ROBERT A., MORANT, BLAKE D. & BARNHIZER,
DANIEL D., VISIONS OF CONTRACT THEORY: RATIONALITY, BARGAINING, AND INTERPRETA-
TION (Carolina Academic Press, forthcoming).
54. Kennedy, Classical Legal Thought, supra note 46, at 191-204.
55. Id. at 213.
56. Id.
57. "[T]he essential question was whether there was a contract, rather than what type." Id. at
were used to quash contract enforcement of obligations that failed to

meet the threshold of express,.fully actualized, and objective manifes-
tations of will.
By the above noted process of abstraction (will theory) and subtrac-
tion (disaggregation) the Age of Formalism or Classical Legal
Thought purged the public from the law of contracts. The relevance
of this purge for contract interpretation was a parallel purge of con-
textualism. The rise of abstract conceptualism dictated a certain mode
of contract interpretation. The purity of the will theory and its con-
ceptualization of contract rules required that the judge find contract
meaning in the words of the contract. An inquiry into the true under-
standing of the parties through a contextual analysis was to be
avoided. A contextual inquiry opened the possibility for the public
regulation of contract through the imposition of community morality.
The judicial inquiry was limited to finding answers not in the context
58
of the contract but in the pre-existing conceptual order.
2. Realist Critique of the Public-Private Distinction

It was the abstractionism and the notion of public-private spheres in
classical legal thought, represented by the will theory and freedom of
contract, that the Realists laid bare. The foremost challengers of con-
ceptualism's public-private distinction in contract law were Robert
Hale, Morris Cohen, and Karl Llewellyn. 59 For them, contract law
should be understood "as a state-imposed regulatory regime, and tai-
lor it accordingly, rather than seeing it as the protection of individual
rights."' 60 Robert Hale, in Coercion and Distributionin a Supposedly
Non-Coercive State,61 attacked the policy arguments behind freedom
of contract. 62 He asserted that most acts of contracting are acts of
coercion and not freedom. Furthermore, every decision to enforce or
not to enforce has distributive consequences.
In a narrower critique, Llewellyn saw the judicial role as "marking
out the limits of the permissible. ' 63 Initially, the court would look to
58. Id. at 249. For the conceptualist "the set of principles chosen was internally consistent, or
at least in the process of becoming so, through a natural, organic, incremental evolution ...
[T]hey believed in the possibility of deducing rules from these principles, so that new cases could
be decided in accordance with the pre-existing scheme." Id. at 252.
59. Duncan Kennedy, From the Will Theory to the Principle of Private Autonomy: Lon
Fuller's "Considerationand Form, 100 COLUM. L. REV. 94, 115 (2000).
60. Id.
61. Hale, Coercion and Distribution,supra note 26.
62. "[T]he systems advocated by professed upholders of laissez-faire are in reality permeated
with coercive restrictions on individual freedom." Id. at 470.
63. Karl N. Llewellyn, Book Review, 52 HARV. L. REV. 700, 704 (1939).
trade usage and custom for evidence of the community's sense of the
permissible or reasonable. 64 If none became apparent, then it is the
court's role to impose a solution through the use of the overarching
principles of good faith and fair dealing. In the standard form scena-
rio, Llewellyn saw the need for an "official-legal regulation." 65 This
public intrusion is implied in his notion of blanket assent. 66 The re-
ceiving party of a form contract assents only to fine print terms that
67
are reasonable and decent.
The legal realists debunked the notion of the private nature of con-
tract law. They argued that the initial formulation of the default rules
of contract was in itself a regulatory act. In addition, by enforcing a
contract or failing to intervene to adjust a contract a court is delegat-
ing "to the more powerful party the freedom to exercise her superior
power over the weaker party. ' 68 The courts' decisions as to which
contracts to enforce are social decisions with distributive
consequences.
In the area of contract interpretation, whether a particular issue of
contract law is skewed towards the public or private poles is depen-
dent on a contextual analysis. To wit, it is dependent on the context
and the nature of the interests involved. 69 The move to contextualism
in the Code was a natural result of Llewellyn's rejection of the prom-
ise-will paradigm. In place of the singular focus of promissorial intent,
he advanced the agreement-in-fact model of contract interpretation. 70
This model necessarily broadened the analysis from the single point of
the promise making (purely private) to a full contextual analysis tem-
porally unconstrained. The agreement-in-fact or true understanding
of the parties required searching into the past of custom and usage
(quasi-public) along with reviewing the party-to-party communica-
tions prior to and subsequent to the time of formation.
B. The Objective-Subjective Dialectic

Theophilus Parsons' 1855 treatise on contracts argued for the re-
placement of the subjective theory of contracts with an objective
64. Id.
65. COMMON LAW TRADITION, supra note 9, at 363.
66. Id. at 370.
67. Id.
68. Singer, supra note 2, at 482.
69. The Realist believed that "the content of that body of ostensibly 'private' law is largely
determined by 'public' polices" and that legal rules "confer advantages on certain parties and
disadvantages on others." AMERICAN LEGAL REALISM, supra note 2, at 99. See, e.g., Cohen,
Property and Sovereignty, supra note 45, at 8.
70.
one. 71 He argued that the subjective meeting of the minds standard

for mutual assent resulted in unpredictability and uncertainty in con-
tract enforcement. 72 Professor Horwitz in interpreting Parsons states
that, "[a] just construction of an individual contract is desirable, [Par-
sons] acknowledged. But it was more important that there be rules
regulating the 'rectitude, consistency and uniformity of all construc-
tion,' so that parties will be able to take 'precautions' in their be-
half."'73 The shift from the subjective to the objective made for a
parallel shift from broadly stated fairness principles to a more formal-
74
conceptual law of contracts.
1. Llewellyn's View of Objectivity

Llewellyn believed that pure objectivity in law application was an
75
illusory goal and that it was merely a technique of judicial writing.
However, he saw the broader use of contextual evidence as a way to
at least bridge the gap between subjective intent and a purely objec-
tive intent. In short, in most cases, the attempt to uncover the "true
understanding" of the parties envisioned by contextual interpretation
is likely to uncover the subjective intent of the parties. There are two
questions that need to be studied: (1) How does the contextual mode
of interpretation relate to the objective and subjective theory of con-
tracts? (2) How does the objectivity implied in Llewellyn's approach
to contract interpretation more likely to uncover the parties' subjec-
tive understandings?
In answering the first question, it can be argued that the contextual
approach is a rejection of the objective manifestations of mutual as-
sent as represented by merely reading the words of the contract. This
view sees the replacement of the formal words with the parties' sub-
jective understanding of the words attributed to them through the
71. MORTON J. HORWITZ, THE TRANSFORMATION OF AMERICAN LAW 1780-1860 197 (1977).
72. Id.
73. Id.
74.
[H]aving destroyed most substantive grounds for evaluating the justice of exchange,
[Williston and others] could elaborate a legal ideology of formalism ... that could not
only disguise gross disparities of bargaining power under a faqade of neutral and formal
rules but of contract law could also enforce commercial customs under the comforting
technical rubric of 'contract interpretation.' Id. at 201.
75. "Personally, I am still of the view that the search for an all-embracing, logically consistent
'system' of law will never amount to more than mere wordplay .... " KARL N. LLEWELLYN, THE
CASE LAW SYSTEM IN AMERICA 26 (1989); "The deciding is done under an ideology which in
older days amounted to faith that there is and can be only one single right answer.... I refer not
merely to a manner of writing but to a frame of thought..." COMMON LAW TRADITION, supra
note 9, at 24.
background discourse of commercial practice. Llewellyn's rejection of

the possibility of obtaining a single meaning through a facial reading
of contract terms was not a relinquishment to subjectivity. Instead,
the use of trade usage, custom, and commercial practice in contract
interpretation provided external and objective measures of meaning.
It was imperative, therefore, for merchants to learn the customary
meaning of terms and practices in their chosen trade or profession.
These were the external meanings that would control contract inter-
pretation rather than the variant, subjective meaning of one or both of
the contracting parties.
In reference to the second question, assuming that the parties ful-
filled their "contractual duty" to understand the meaning of trade
terms and practices, then the contextual meaning of the words of their
contract would indeed reflect their true subjective understandings. In
the event a merchant party failed to internalize the usage and customs
of her trade or business, then her subjective understanding of the con-
76
tract terms would be irrelevant under the contextual approach.
C. The Fact-Law Distinction

Grant Gilmore shifted the objective-subjective interpretation of
contract law into a fact-law transformation. Contract law, and its
rules, become objectified by a transformation of known fact patterns
from questions of fact to questions of law:
If in contract ... the actual state of the parties' minds is relevant,
then each litigated case must become an extended factual inquiry
into what was intended... If, however, we can restrict ourselves to
the externals, then the factual inquiry will be much simplified and in
time be dispensed with altogether as the courts accumulate prece-
76. This view of contextualism revolves around the issue of culpability. A party's failure to
internalize trade usage and custom can be seen as professional negligence. Thus, a tort analysis
can be utilized in applying the appropriate meaning to contract language. The parties have a
duty of care to exercise competence in the negotiation of a merchant-to-merchant contract. That
duty requires the merchant party to educate herself in the meanings attributed to contract terms
in commercial practice. Failing to do so results in the abdication of authority over the meaning
of the contract. It can be argued that such incompetence should be weighed against the party
claims of mistake, misrepresentation, and fraud. Professor Patterson has also developed a gap-
filling dichotomy that he labels as interpretive and substantive incompleteness. Dennis M. Pat-
terson, The Pseudo-Debate over Default Rules in Contract Law, 3 So. CAL. INTERDISCIP. L.J.
235, 243 (1993). A judge faced with an open term problem will seek to fill the gap. The pre-
ferred means is interpretive gap filling in which she looks to the contextual evidence to bolster a
case for implied intent. "The court weaves a conclusion of implied intent by examining the
essence of the contract within the context of the contracting." LARRY A. DIMATTEO, CON-
TRACT THEORY: THE EVOLUTION OF CONTRACTUAL INTENT 15 (1998) [hereinafter DIMATT-EO,
CONTRACr THEORY]. When the fiction of implied intent is not available then the judge is forced
into an overt normative inquiry.
dents about recurring types of permissible and impermissible con-
duct. By this process questions, originally perceived77 as questions of
fact, will resolve themselves into questions of law.
To bring consistency to contract interpretation and enforcement, class-
ical legal thought shifted the determination of the issue of contractual
intent from a question of fact to a question of law. 78 Formalism's em-
brace of the objective theory was aligned with its view that contract
interpretation is best handled as a matter of law. In Llewellynian
terms, the recognition of a standard fact pattern or situation-type
leads to a finding in law. 79 "The discretion [is] in labeling of the fact
pattern, not the application of the rule." 80 Under classical legal
thought, the labeling process was decided as a matter of law. This
shift is what allowed for the fuller conceptualization of contract law.
Contextualism, in turn, required the interpretation of extrinsic evi-
81
dence as a matter of fact.
In the domain of contract interpretation, the plain meaning rule fo-
cused the inquiry on the text without resort to contextual evidence. It
required the direct application of rule to text-a matter delegated to
the deductive reasoning of the judicial mind. "If words are deemed to
have a natural meaning, then interpretation of a writing may be
viewed as raising a legal issue because the reasoning process is deduc-
tive. There is only one right answer."' 82 Cases of only one right an-
83
swer translate into that answer being imposed as a matter of law.
77. GRANT GILMORE, THE DEATH OF CONTRACT 42 (1974). Gilmore refers to Holmesian
thought for this proposition. Id at 41.
78. Id.
79. Infra Part II.C.
80. DIMAT[EO, CONTRACT THEORY, supra note 76, at 16.
81. It should be noted that Llewellyn was not a believer in the lay jury's ability to interpret
merchant facts. He unsuccessfully argued for the institutionalization of merchant juries. See
generally Zipporah Batshaw Wiseman, The Limits of Vision: Karl Llewellyn and the Merchant
Rules, 100 HARV. L. REV. 465 (1987) [hereinafter Wiseman, Merchant Rules].
82. William C. Whitford, The Role of the Jury (And the Fact/Law Distinction) in the Interpreta-
tion of Written Contracts,2001 Wisc. L. REV. 931, 936. Professor Whitford further notes that the
fact-law distinction rests upon the distinction between general and particular. "Sometimes we
use the occasion of a law application to further specify a general standard ... In such circum-
stances, the general/particular distinction suggests that the law application should be considered
a question of law." Id. at 933.
83. The shift to contextualism in American contract interpretation should have lead to a
greater role for the jury in contract law disputes. In theory this is true but in practice the role of
judge as gatekeeper of extrinsic evidence has preserved the dominant role of judges in contract
interpretation. The admissibility of contextual evidence is often limited to the role of determin-
ing if the words of a contract are susceptible to more than one interpretation. After reviewing
the evidence, the court may decide as a matter of law whether this is indeed the case. If it
decides that there is no reasonably viable alternative meaning then the interpretation is made as
a matter of law. See, e.g., Pac. Gas & Elec. Co. v. G.W. Thomas Drayage & Rigging Co., 442 P.2d
641 (Cal. 1968) (opinion of Chief Justice Charles Traynor).
D. Formality as Servant of Concept and Context

Rudolf von Jhering in the late Nineteenth Century separated the
uses of formalities in contract law from the debate over the role and
uses of rules and standards. 84 A formality, in his scheme, although
often embedded in a formal rule, is a device to manifest contractual
intent. Some have interpreted Llewellyn's dislike of the formalized
application of rigid rules as a broader rule skepticism. 85 This miscon-
ception spilled over to his view of the role of formality in the law. In
fact, Llewellyn saw formalities as serving important channeling func-
tions. As early as 1931, Llewellyn had this to say about the Statute of
Frauds: "After two centuries and a half the statute stands, in essence
better adapted to our needs than when it was first passed. '' 86 Lon
Fuller is generally given credit for elaborating a tripartite typology of
the functions of legal formalities. In his Sections 2, 3, and 4 of Consid-
eration and Form, Fuller explains the evidentiary, cautionary, and
channeling functions of legal formalities. 87 In fact, this typology, in a
more rudimentary form, existed ten years earlier in Llewellyn's What
Price Contract?88 The channeling function is apparent in his discus-
sion of primitive form: "Formal acts of the known type then signify
openly definitive intent to change the existing situation-and to be
relied on."8 9 However, for Llewellyn the genesis of formality was not
found in the law but in society. Through a process of regularization,
transactional practice is formalized and eventually adopted by the law
as a legal construct. 90
84. RUDOLF VON JHERING, THE SPIRIT OF ROMAN LAW (0. de Meulenaere trans. 1880), as
cited in Duncan Kennedy, Principle of Private Autonomy, supra note 62, at 112.
85. Llewellyn was not a rule skeptic in the broader sense. He was a critique of the abstrac-
tionism and rigidity of rules and their application in classical legal thought.
86. What Price Contract?, supra note 7, at 747. It is interesting to note that Fuller did not
consider the Statute of Frauds a true form since it did not perform the requisite channeling
function. "The Statute of Frauds has only a kind of negative canalizing effect in the sense that it
indicates a way by which one may be sure of not being bound." Lon Fuller, Consideration and
Form, 41 COLUM. L. REV. 799, 802 (1941).
87. Fuller, Considerationand Form, supra note 59, at 800-01.
88. What Price Contract?, supra note 7, at 711-12 and 746-48. It is interesting to note that
Llewellyn is the first reviewer acknowledged in the * footnote in Consideration and Form.
89. Id. at 711.
90. Llewellyn's contextualism is apparent in his view of form. Form flows from society to law
and then back to society. In a footnote, Llewellyn gives this romantic anecdote: "Dreaming is
futile on such points [of whether form flows initially from law or from society]; yet the imagina-
tion presses toward picturing the first man to lend unmistakable assurance to his words by draw-
ing on some form-or by creating it-before any form was known. One suspects cumulative
accident, rather than invention." Id. at 711, n. 18. "[Tihe common purpose of form is clear[:]
[t]he overt sign of utter intent to assume obligation has been given[;] [t]he other party has reason
to rely. The consequence...is...recognition by law official .... Id. at 712.
The evidentiary and cautionary functions are alluded to in a section

entitled "Prophylactic Form." As to the former, Llewellyn asserts that
"no system may ignore the value of forms.., as permanent and reck-
onable evidence of what was agreed upon in the deal." 91 The caution-
ary function is not expressly expounded upon but can be gleaned from
the last phrase of the section in reference to the Statute of Frauds and
the parol evidence rule: "[T]he net effect of these two rules . . . is
almost certainly wholesome.., in inducing care in the making of that
record." '92 Therefore, Llewellyn's contextualism is not aimed at di-
minishing the value of formal writings. It is an assault on the protec-
tion of such writings by the parol evidence rule. He refers to the real
world of contracting to isolate two problem areas-the admissibility
of negotiation evidence and oral modifications. 93 The Realist tech-
nique of questioning the certainty of rules by pointing out counter-
rules and counter-polices is in evidence here. As to the former, he
states that courts are "faced with the counter policy of recognizing the
frequency with which vital terms of oral negotiations are in fact omit-
ted (or not reduced to) a formal writing."' 94 The Code later deals with
this issue by allowing the admission of prior agreement or contempo-
raneous oral agreement that does not contradict the final written
95
expression.
As to the common practice of merchants verbally modifying per-
formance under a written contract, Llewellyn states that it is "a prob-
lem as yet inadequately solved."' 96 He would later venture a solution
through the Code by allowing the admission of course of performance
evidence, 9 7 the elimination of the requirement of new consideration
for contract modifications, 98 and the recognition of waiver even in
cases where the contract excludes oral modifications and waivers. 99
These are examples of the rigid application of formality giving way to
the contextualism of real world practices. Llewellyn's critique of the
rigid application of formality should not be read more broadly as an
attack on the benefits of form in general.
91. Id. at 746-747.

92. What Price Contract?,supra note 7, at 748.
93. Id. at 747.
94. Id.
95. U.C.C. § 2-202 (1998) ("Final Written expression: Parol or Extrinsic Evidence").
96. What Price Contract?,supra note 7, at 747.
97. U.C.C. § 2-208 (1998) ("Course of Performance or Practical Construction").
98. U.C.C. § 2-209(1) (1998) ("Modification, Rescission and Waiver").
99. U.C.C. § 2-209(4) (1998).
III. MAKING RULES WORK: LLEWELLYN
William Twining once stated that "one of [Llewellyn's] favorite

themes was the importance of maintaining a continual interplay be-
tween abstract ideas and concrete detail."' 00 Implicit in Llewellyn's
thought is a dialectical relationship between the abstract and the par-
ticular; between theory and praxis; and between concept-rule and so-
cial reality. 10 1 Llewellyn in his 1930 casebook sketches the role of
conceptualism in law:
Yet we ... must retain it as a convenient and fairly accurate summa-
tion of past decisions . . . used thus, the verbal formula brings past
experience into play, without obscuring the meaning of the facts in
the case at issue ... nor permit our aesthetic pleasure in an abstract
rule or system to interfere with our observation of the concrete het-
erogeneity of life. [It is the] difference between doctrine as a causal
factor in inducing a decision and doctrine as a mere ex post facto
justification of a decision already reached. Doctrine is emphasized,
as doctrine must be, but it is emphasized as the first step in a wider
process of seeing what law means and of bringing it to bear on
facts. 102
Llewellyn's attack on classical legal thought was not an attack on con-
ceptualism but on the formal application of concepts. In his 1930 arti-
cle A Realistic Jurisprudence, Llewellyn states that "[l]ike rules,
concepts are not to be eliminated . .. [b]ehavior is too heterogeneous
to be dealt with except after some artificial ordering." 103 But for the
realist the ordering is only the first step in the process of law applica-
tion. Each new case questions the correctness of the ordering. "[A]
realistic approach to any new problem would begin by skepticism as to
the adequacy of the received categories [or concepts] for ordering the
phenomena effectively toward a solution of the new problem."' 0 4
Thus, there is an ever-evolving dialectical relationship between rule
and fact and between the general and the particular. 10 5 The following
sections of this Part review facets of Llewellyn's vision on how to for-
100. WILLIAM TWINING, THE KARL LLEWELLYN PAPERS 21-22 (1968) [hereinafter LLEWEL-
LYN PAPERS], as quoted in, Dennis M. Patterson, Good Faith, Lender Liability,and Discretionary
Acceleration: Of Llewellyn, Wittgenstein, and the Uniform Commercial Code, 68 TEX. L. REV.
198, n.189 (1989).
101. Patterson, Llewellyn, Wittgenstein, supra note 100, at 198 n.189.
102. LLEWELLYN, LAW OF SALES ix-xi (1930).
103. Realistic Jurisprudence,supra note 2, at 453. See generally Carl A. Remington, Llewellyn,
Antiformalism and the Fear of Transcendental Nonsense: Codifying the Variability Rule in the
Law of Sales, 44 WAYNE L. REV. 29, 32 and 56 (1998).
104. Id.
105. Pollock's Principles of Contract: "Legal rules exist not for their own sake, but to further
justice and convenience in the business of human life; dialectic is the servant of their purpose,
not their master." FREDERICK POLLOCK, PRINCIPLES OF CONTRACT x-xi. (9th ed. 1921).
mulate a workable or functional conceptualism, that is, how to make

rules work.
A. Llewellynian Conceptualism
Although Llewellyn abhorred the abstract conceptualism of classi-
cal legal thought, he understood the need for generalization. But his
was a generalization generated by the particular. It was essential that
legal concepts be continuously refreshed with the concrete facts of
daily practice. The relationship between concept or rule and the fac-
tual situations of cases was dialectical in nature. The best type of rule
calls for the examination of the factual as a precondition for its
application:
His juristic ideas grew to a large extent out of his early work in the
law of negotiable instruments and sales; many of his contributions
to contract and commercial law, including the Uniform Commercial
Code, represent the applications of his theoretical ideas. This em-
phasis on the interplay between the abstract and the concrete is the
keystone of the bridge which Llewellyn built between theory and
practice. 106
Llewellyn's contextual system is an attempt to deal with the inher-
ently indeterminate nature of language and concepts. The problem
with abstract conceptualism is that it failed to confront the difference
between words in concept and words in use. We understand our words
from the way we use them. 10 7 If we use them in a different way, then
our understanding of them will change accordingly. Llewellyn under-
stood that the meaning of words or rules was in a constant state of
flux. It was the task of "the imagination to bring within its field of
attention the language through which it functions as well as the non-
linguistic world within which it seeks to act. ' 10 8 Llewellyn saw situa-
tion-sense10 9 as a method of affixing a meaning to rules at a specific
moment in time. His singing rules' 11 0 open texture allowed for the
affixation of meaning through the application or use of its words to
106. LLEWELLYN PAPERS 21-22, supra note 100, as quoted in, Dennis M. Patterson, Good
Faith, Lender Liability, and DiscretionaryAcceleration: Of Llewellyn, Wittgenstein, and the Uni-
form Commercial Code, 68 TEX L. REV. 169, 198 n.189 (1989).
107. See LUDWIG WITTGENSTEIN, PHILOSOPHICAL INVESTIGATIONS (G. Anscombe trans.
1953); LUDWIG WrITrGENSTEIN, PRELIMINARY STUDIES FOR THE "PHILOSOPHICAL INVESTIGA-
TIONS" (1965). For an explanation of the similarities between Wittgentstein and Llewellynian
thoughts on meaning see Dennis M. Patterson, Good Faith, Lender Liability, and Discretionary
Acceleration: Of Llewellyn, Wittgenstein, and the Uniform Commercial Code, 68 TEX L. REV.
169, 176, 199 n.190, 204-208 (1989).
108. James Boyd White, Thinking About Our Language, 96 YALE L.J. 1960, 1973 (1987).
109. See infra Part II.C.
every context. The next two sections will examine how the Llewel-
lynian interplay of abstract concept and concrete application impact
the roles of generalization and rules in the legal order.
B. General-particularized
To more fully appreciate the intersection of contextualism with con-
ceptualism, we will briefly examine the role of classification in the
conceptual order. We will use the classification of standard forms as
contracts to illustrate law's tradeoff between generalization and par-
ticularization. Arthur Leff noted that the classification of things as
the same thing is an illusion-"there are no identical things."' 1 1 Thus,
the classification of things as contracts is merely an intellectual con-
struct based upon an unreality of identity." 2 Classifying a standard
form as a contract is to state that it possesses some degree of contract-
ishness.1l 3 Whether it is indeed a contract is a different
story. Limit-
ing the analysis to the criteria that are aligned with its contract-ishness
allows it to be classified as a contract and thus enforced under con-
tract law. Therefore, if the criterion is that the subject-matter of the
paper or thing is the type that is generally considered the subject of
contracts, then the thing or paper must be a contract. Or, if the thing
or paper indicates a general intent to form a binding agreement, then
that exhibition is enough to make the thing a contract.
However, if the criterion is expanded to include factors not condu-
cive to classical contract theory, then the classificatory distinction be-
tween contract and non-contract will be exploded.'14 For example, if
manifestation of intent is determined not by the existence of the stan-
dard form, but by the consistency of the terms with the negotiated
agreement-or in the case of an exchange of forms, the consistency
between the terms of both forms-then the legal conclusion should be
that a contract has not been formed. It is only when the criterion is
limited to a level of generality that the classification of a standard
form, as being the same as a fully negotiated, customized contract,
that the inclusion of standard form contracts within the classical con-
tract scheme is successful. When the criterion is shifted from the level
of generality to the level of particularity the family resemblance"15 be-
111. Arthur A. Leff, Contract as Thing, 19 AM. U. L. REV. 131, 132 (1970). In the words of
G.E. Moore, "[e]verything is what it is, and not another thing." G.E. MOORE, PRINCIPIA
ETHICA (1960).
112. Id.
113. LUDWIG WITTGENSTEIN, PHILOSOPHICAL INVESTIGATIONS 65-67 (1967).
114. Leff, Contract as Thing, supra note 111, at 133.
115. Id.
tween the custom contract and the standard form breaks down. At
the level of increased particularity it becomes clear that the two things
are of different classes.
116
Arthur Leff asked the following question: "Why classify at all?,"
when all classification may be exploded by increasingly particularized
criteria. His response is that generalized classification promotes "in-
tellectual and operational efficiency." 117 The classification of things at
some level, as contracts versus non-contracts, is imperative for the
functioning of a well-ordered marketplace. 118 The loss of some degree
of particularity, accuracy, or truthfulness is accepted in order to reap
the benefits of efficiency.
The aesthetics of pigeonholing standard form contracting into the
general classification of classical contracting is performed at a cost.
The price is the decreased accuracy or truthfulness that greater partic-
ularity would produce. The problem with a given classification
scheme is that it has the inherent tendency to ignore important differ-
ences between two things that are grouped into the same class. The
classification scheme must constantly be re-examined to see if particu-
larity may be increased without a total loss of efficiency. Certain class
groupings, such as custom contracts as contracts and standard form
contracts as contracts, will need to be stripped of their artificialclass
homogenization'19 if the divergence between truthfulness (social real-
ity) of the classification and the efficiency of the classification (inner
morality of law) becomes too great.
The fact of a dynamic social reality ensures the on-going divergence
between law's classification scheme and real world practice. The law's
likely response is the continuous creation of sub-groupings (sub-classi-
fications). This has happened in contract law with the enactment of
the Code, along with separate statutory regulation of insurance and
labor contracts. 120 The sub-classification process has extended into
the law of sales with the enactment of Article 2A (leasing of goods) of
the Code.
116. Id. at 134.

117. Id.
118. Leff presents a more embellished description for this rationale:
Actually, this utilitarian answer is at most only part of the story. I suspect that people
classify for the same reason that tigers hunt and most animals copulate, which is not
solely to have food and children, respectively. It is a terrible mistake, in assessing the
power of ends, to overlook the aesthetics of getting there.
Id. at 134 n.11.
119. Id. at 136.
120. See generally Robert S. Summers, Collective Agreements and the Law of Contracts, 78
YALE L. J. 525 (1969).
Throughout Llewellyn's writings on contract and jurisprudence one

can see at work the general theme of "the importance of maintaining
a continual interplay between abstract ideas (general) and concrete
detail (particular).' ' 121 Corbin explained that for Llewellyn the judge
"must compare the specific situation with other similar (never identi-
cal) situations and thus find a 'type-situation' that enables him to con-
'122
struct a tentative working rule that can be applied to all of them.
He further explains that this conceptualization of similar fact situa-
tions is not a return to abstract conceptualism. "It is a tentative, not
an 'eternal or changeless' generalization .... [It] is to be corrected or
replaced by other generalizations by other judges ...as new situations
'123
and new life conditions press on their attention.
John Dewey counseled that legal analysis must incorporate the ab-
stractness of concepts and rules, along with the particularity of con-
crete facts and social values. In this way the goals of systemic
certainty and particularized justice can be achieved. 124 Llewellyn's
centrist brand of legal realism offers much in constructing such a
blending of conceptualism and contextualism. Despite the Realists'
overall critique of judicial reasoning, Llewellyn's belief in the case law
system and the role of precedent remained one of guarded optimism.
The role of precedent as a formalistic control was to be rejected; the
role of precedent as a guide to decision is to be embraced. Instead of
using cases as the core of abstract conceptualism, the cases can be
viewed as evidence of situation-types and thus compared by analogy
125
to the case at hand.
121. LLEWELLYN PAPERS, supra note 100, at 21.

122. Arthur Corbin, A Tribute to Karl Llewellyn, 71 YALE L.J. 805, 811-12 (1962).
123. Id. at 812.
124. See generally, Larry A. DiMatteo, The Norms of Contract: The FairnessInquiry and the
'Law of Satisfaction'--A Nonunified Theory, 24 HOFSTRA L. REv. 349 (1995) (discusses the
competing norms advanced by contract law).
125. Within the domain of the particularized, a different parameter presents itself. I will call
this the general-specific parameter of the particularized. The general-specific parameter focuses
upon the contextual viewfinder. In a contract formation, there is both a specific and a general
context. The issue is what types of contextual factors can or should be weighed by the judicial
interpreter. Alternatively stated, should the contextual analysis include factors beyond the con-
textualism envisioned by Llewellyn. Clearly, the use of some of the personal features of the
contracting parties as important contextual elements were envisioned in his view of standard
form contracting and the doctrine of unconscionability. Professor Morant's work on the need
for more flexible applications of contract rules in order to factor in race and gender disparity is
an example of an expanded contextual framework. "[Flactors of racial or gender bias command
attention, particularly when they can impact the formation or judicial interpretation of agree-
ments." Blake D. Morant, Law, Literature,and Contract: An Essay in Realism, 4 MICH. J. RACE
& POL'Y 1, 8 (1998) [hereinafter Morant, Law, Literature,and Contract]. See generally Blake D.
Morant, The Relevance of Race and Disparity in Discussions of Contract Law, 31 NEW ENG. L.
REv. 889 (1997); Blake D. Morant, Contractual Rules and Terms and the Maintenance of Bar-
C. Situation-Sense
The idea of using existing cases as evidence of situation-types to be
used in the interpretation of a contract and in the application of con-
tract rules was more fully developed in Llewellyn's concept of situa-
tion-sense. Situation sense methodology looked to uncover type-facts
(operative facts) found in a series of cases including the case at bar.
These type-facts could then be used to respond to real world develop-
ments through the fabrication of a situation-type. 126 The grouping of
the case at bar with a situation-type was the linchpin for meaningful
contract interpretation and orderly rule application. Todd Rakoff de-
scribed the situation-sense interpretive methodology 127 as a process of
"constructing models which describe type-situations."'1 28 The situa-
tion-sense methodology and the reconstruction of rules are backward
and forward-looking. They look to the past reason behind the existing
rule and how alternative reconstructed rules will fit, and justify situa-
tion-types in the future. Through this methodology, legal rules are
12 9
made to fit a "structured" social context.
Llewellyn provided this version of situation-sense in 1954:
[T]he existing law can sometimes point up clearly how not to make
law, whether simplicity has been sought by way of some mere word-
formula which does not fit the situation and the situation's set of
problems....[T]he effort to throw into a single basket the hugely
varied situations... has led again and again either to plain injustice
or to the court's jumping whatever traces were sought to be im-
posed upon it-with a resulting complete uncertainty. Where oper-
gains: The Case of the Fledgling Writer, 18 HASTINGS COMM. & ENT. L.J. 453 (1996). Professor
Morant asks: "How can parties or scholars highlight the possible pejorative function of bias or
prejudice in bargaining relationships within the confine of present contract rules?". Morant,
Law, Literature,and Contract, supra, at 17.
126. Situation-sense is "the type-facts in their context and at the same time in their pressure
for a satisfying working result." COMMON LAW TRADITION, supra note 9, at 60. Professor Todd
Rakoff uses Jacob & Youngs Inc. v. Kent to illustrate this point. Cardozo saw two situation-
types for deciding whether a builder is owed final payment despite constructing a building pos-
sessing a relatively minor defect. The two situation-types were the sale of "common chattels"
and a contract to build a "mansion or a skyscraper." Ultimately, he decided that the second type
required its own rule-substantial performance-while the first dictated the application of the
traditional rule of perfect tender. Todd D. Rakoff., The Implied Terms of Contracts: Of 'Default
Rules' and 'Situation-Sense',in GooD FAITH AND FAULT IN CONTRACT LAW 191, 208 (Jack Beat-
son & Daniel Friedmann eds. 1997); see also Todd D. Rakoff, Social Structure, Legal Structure,
and Default Rules: A Comment, 3 S. CAL. INTERDIsc. L.J. 19, 22 (1993) (the construction of
legal categories is partially an adoption of roles and transactions defined by society). See gener-
ally Reason and Context, supra note 11, at 447-450 (discussing situation-sense methodology).
127. Id. at 216-19.
128. Rakoff importantly notes that "[t]hese models do not aspire to the universality present in
abstract rules." Id. at 216. They are rules that are cut from social content and not from an
internal conceptual ordering.
129. Id. at 221.
ation and results are today scrambled and unreliable even though
the word-formula looks, then what is needed is to re-examine the
problems and the material and to come out with language which
30
really fits the need.1
Thus, the indeterminacy of facts in a novel case can be somewhat ame-
liorated through their attachment to a category of facts 1 31 that the law
views as significant.
D. The Role of Rules in the Legal Order
As discussed earlier, Llewellyn possessed a moderate form of rule

skepticism. He was a believer in the usefulness of properly drafted
rules. Rules singing with patent reason and open-textured enough to
allow the law of society (commercial practice) to illuminate that rea-
son were what the old abstract rules lacked. An unpublished manu-
script, The Theory of Rules,132 gives insight into his view of the proper
role of rules in the legal order. He rejects the ultimate precision of
legal rules. 133 Instead, he attributes the goal of legal precision to the
formalism of abstract conceptualism. Llewellyn asserts that if a cor-
rected ideology is implemented by stripping the dominate ideology of
the formalism of logic and its goal of a logically precise legal structure,
then rules could be made to work. 34 Although not a true believer of
the transformative or critical power of law, he nonetheless saw a role
for rules as guiding principles. They could encourage the selection of
the better options available in commercial practice.
130. Statement of Karl N. Llewellyn to Executive Committee on Scope and Program of the
NCC Section on Uniform Commercial Acts, reprinted in, TWINING, THE REALIST MOVEMENT,
supra note 2, at 538.
131. In Llewellyn's 1930 casebook his narrow categorization of transaction types included a
separate index in which transactions were cataloged according to commodity types. The Index
listed the following commodity types: Agricultural and Foodstuffs, Animal Products, Livestock,
Fish, Forest, Mineral, Semi-Manufactured Goods, Manufactured Foodstuffs, Other Finished
Manufactures, Stocks of Goods, and Obligations. LLEWELLYN, LAW OF SALES 1073-77 (1930).
Llewellyn saw the major task of the judge of "constant[ly] reaching for a sound way to fit facts
into some significant pattern or type." COMMON LAW TRADITION, supra note 9, at 125.
132. "Rule of Thumb and Principle" in LLEWELLYN PAPERS, supra note 100, at 81. Professor
Twining estimates that it was written in the period 1938-40.
133. The demise of rule precision is endemic in the dynamic nature of modern society: "The
pace of an industrial civilization, its ongoing regroupings of interest, people, and problem, have
presented new states of fact too rapidly for knowledge to keep up with them." Id. at 83.
134. The rules of classical legal thought were detached from underlying purpose and policy.
"A statute merely declaring a rule, with no purpose or objective, is nonsense." Karl N. Llewel-
lyn, Remarks on the Theory of Appellate Decision and the Rules or Canons about How Statutes
are to be Construed, 3 VAND. L. REV. 395, 400 (1950).
E. Llewellyn's Singing Rule

The rules-standards debate 135 focused on the differences between
rules and standards, along with their appropriate roles in the legal sys-
tem. For purposes of the present undertaking, the distinction between
rules and standards is implicated by Llewellyn's notion of singing
rules. One way of understanding the singing rule is to view it as a
rule-standard hybrid. Rules are generally viewed as closed, fixed
edicts that can be directly applied to a determinate amount of issues
and disputes. Standards are more open in nature and generally pro-
vide a continuum of possible responses. Although, standards are di-
rectly applied they are generally applicable to larger varieties of cases
than rules. Furthermore, the application of standards often entail
greater interpretive work for the judicial applicator. This interpretive
work requires the judge to look at the policies behind the standard.
Llewellyn's singing rule (or standard) explicitly implicates the prin-
ciple, reason, or policy that it is attempting to serve. Soia Ment-
schikoff summarized the essence of his technique as first stating the
applicable law, then measuring that law with the reality it is suppose
to reflect, and finally evaluating the reason or policy "thus re-
flected. ' 136 This type of analysis suggested that the best type of law
was the type that provided the reason for its adoption on its face.
Thus, Llewellyn's singing rule collapses the verticality between over-
arching principle and underlying rules. At the same time it bridges
the separation between underlying rationales and rule. A singing rule
is one that provides its reason, purpose, and use on its surface. This
provides the judicial arbiter with guidance or direction when applying
the rule to a novel situation. At the same time, the singing rule is
open-textured to allow contextual input. The patent reason provided
by the rule allows for an orderly adjustment (expansion or contrac-
tion) of the rule.1 37 The rule adjustment is also informed by the ad-
135. See, e.g., Mark D. Rosen, What has Happened to the Common Law?-Recent American
Codifications, and Their Impact on Judicial Practice and the Law's Subsequent Development,
1994 Wisc. L. REV. 1119, 1160-76; Kathleen M. Sullivan, Foreword: The Justices of Rules and
Standards, 106 HARV. L. REV. 22, 56-69 (1992).
136. Soia Mentschikoff, Karl N. Llewellyn, 9 INT'L ENCYCLOPEDIA SOC. SCI. 440, 440
(1968).
137.
In drafting the Code, Llewellyn continuously.., employed policy and purpose as the
central device to convey and clarify statutory meaning. As a result, purpose, policy,
and reason are major determinants of what the language of the text means. . . . The
patent reason principle also assigns a definite role to the courts in interpret ing the
open-ended principles of the Code ....
John J.Gedid, U.C.C. Methodology: Taking a Realistic Look at the Code, 29 WM. & MARY L.
REv.341, 385-386 (1988) (hereinafter Gedid, U.C.C. Methodology).
mission of contextual evidence in which the type-facts of the case can

be used to align with "known" type-facts (past cases) to evolving situ-
ation-types (commercial practice). This evolving rule adjustment,
through the use of reason and context, prevents the obsolescence and
rigid application that characterized the paper rules of classical legal
thought.t 38
For Llewellyn, even in a system of properly drafted singing rules,
the use of patent reason is not an insular affair. Rule application re-
quires theory building up the hierarchy of rule to principles or meta-
principles and "horizontally" across the entire subject matter of con-
tract law. 139 Thus, the rule application is not only made to fit and
justify that particular area of contract law but it is also made to help fit
and justify the patent reason (purpose, reason, policy) of all of con-
tract law. The next Part will examine the idea of contract interpreta-
tion and rule application as an exercise in theory building from the
perspectives of Dworkinian and Llewellynian legal theory.
IV. DWORKIN-LLEWELLYN THEORY BUILDING
Karl Llewellyn and Ronald Dworkin are both idealists in that they
believe in the integrity of the common law system. As such, they both
are theory builders. Both believed that the common law system pro-
vided restraints (Dworkin's institutional morality and Llewellyn's
craft skills) that guided judges in their task of fitting rules to novel
cases and justifying rule adjustments within the whole body of (con-
tract) law. 140 Each in different ways believed that law could provide
138. Llewellyn described such a formalistic system of rule application as follows: "[A] rule in
its harshest form is applied in a recurring situation which the harsh form of the rule happens to
fit." COMMON LAW TRADITION, supra note 9, at 124.
139.
. . . The text of each section [of the Code] should be read in the light of the purpose
and policy of the rule or principle in question, as also the [Code] as a whole, and the
application of the language should be construed narrowly or broadly, as the case may
be, in conformity with the purposes and policies involved...
U.C.C. § 1-102(2)(b), cmts. 1 & 2 (2004).
The important point is that Llewellyn's understanding of the judicial process led him to
draft language of principle and to use policy, purpose, and reason to convey meaning.
Faced with that statutory architecture, courts should not and probably cannot avoid
using policy and purpose in interpreting the Code...
Gedid, U.C.C. Methodology, supra note 137, at 385-386 (1988).
140. See Jon 0. Newman, Between Legal Realism and Neutral Principles: The Legitimacy of
Institutional Values, 72 CAL. L. REV. 200 (1984). Judges feel a loyalty to the institutional value in
"the orderly development of the law." Id. at 215. See also Samuel I. Shuman, Justification of
Judicial Decisions, 59 CAL. L. REV. 715 (1971) (judges feel compelled to justify their decisions
objectively using external analogues). See generally David Lyons, Justification and Judicial Re-
sponsibility, 72 CAL. L. REV. 178 (1984) (discusses rule application and judicial justification).
determinate answers to novel or hard cases. For Llewellyn, rules re-

mained the most important part of an orderly, functional legal order.
For Dworkin, principles play the most crucial part in legal ordering.
This Part will examine both versions of theory building. It will then
take from Dworkin's theory building scheme to improve on Llewel-
lyn's contextually-driven dual track theory of interpretation.
1 41
A. Llewellynian Theory Building: The Is, What Might Be,
and the Ought of Rule Application
Llewellyn's realism dictated that when stating or restating the law

one looks to narrow categories of cases to derive workable rules. The
jurist begins by reading existing cases, not to deduce broad statements
of law and principle, but in order to derive narrow legal issues and the
key facts that are crucial to the decision (is). This ground up view of
legal precedent also applied to "reading" cases still to be decided
(what might be). The what might be can be seen as a temporal exten-
sion of the is. Thus, Llewellyn's view is not the temporally fixed focus
142 It
of existing law but includes a projection of the is into the future.
is only then that one can determine if the court is actually doing what
doctrine supposedly dictated. If there is a divergence, then the rules
need to be adjusted to fit and justify the rule application (ought).
Thus, Llewellyn's separation of the is from the ought of law was
confined to the first stage in a multi-stage process of interpretation.
The first stage is one of rule identification involving the finding of the
current state of the law (rule). This work is done within law's concep-
tual side. The second stage is the determining of the is of the case
within an existing, or more importantly, within a novel group or cate-
gory of cases. This recognition of a new category of cases includes an
extenuation of the is into future cases that would need to be folded
into the new category. The final stage of rule adjustment is the fusion
of is-ought. The novelty of the formulated category of cases informs a
rule adjustment. The rule adjustment has both is and ought compo-
nents. The is component is represented by the recognition of the
needed rule application's divergence with the current state of the rule.
The divergence is represented by the inability to adequately fit and
justify the rule to the case. Llewellyn asserted that classical contract
141. See Robert M. Cover, Foreword: Nomos and Narrative, 97 HARV. L. REV. 4 (1983).
142. Llewellyn in the Report of the Second Draft of the Revised Uniform Sales Act discussing
the malleability of its provisions stated that the "borders need to be left open for new Cases of
similar reason, as yet unimagined." REPORT AND SECOND DRAFT: THE REVISED UNIFORM
SALES ACT (1941) (emphasis added).
law often masked any such ill-fit through the use of covert devices. 143
The requirement of patent reason in the crafting of singing rules
forces the court to overtly justify its rule fit.
The ought component is represented by the projection of the is into
the future or what might be. This interpretive license creates a feed-
back loop in which the future is is only a possibility-a possibility that
is effected by the present rule fit or adjustment. The projection of the
is to the what might be allows the court to in essence go back in time
and change the what might be. The future consists of numerous pos-
sibilities and what might be's. The court's presentiation144 of future is's
provides the opportunity for normative change. For example, differ-
ent rule adjustments can be seen as impacting the evolution of busi-
ness practice. The court can select a rule adjustment that allows for
the preemption of the future evolution of a bad practice. The rule
adjustment can be a transformative device to impact future practice
and shape the characteristics of future cases.
B. Dworkinian Theory Building and the Law of Contracts

Ronald Dworkin's law as interpretation theory rejects the indeter-
minacy arguments of rule skeptics. For Dworkin, even if one ac-
knowledges the veracity of Llewellyn's axiom that for every rule or
principle there is a counterrule or principle, 145 law's internal rational-
ity or order dictates when the rule or counterrule and when the princi-
ple or counter principle can appropriately be applied. Under
Dworkin's scheme, the problem of rule or principle indeterminacy
presents itself only at a lower level of abstraction. The judge can find
the proper rule or principle-fit by ascending up a pyramid of legal
abstraction. 46 For Dworkin, this moving up the pyramid of abstrac-
tion or principles is not an exercise in transcendental nonsense 47 but
an instrumental undertaking grounded in the concrete. It is clear,
nonetheless, that Dworkin's exercise in interpretation is internal to
the law. For Dworkin, the key element in the legal order is the princi-
143. These would include doctrines like misrepresentation, mistake, and duress, along with
the use of the notion of implied intent.
144. See Ian R. Macneil, Commentary, Restatement (Second) of Contracts and Presentiation,
60 VA. L. REV. 589 (1974). Macneil describes "presentiation" as the "recognition that the course
of the future is bound by present events and that by those events the future has for many pur-
poses been brought effectively into the present." Id. at 589.
145. Supra note 37.
146. Duncan Kennedy shares Dworkin's view of the power and utility of abstraction but
where Dworkin sees harmony Kennedy sees contradiction. Compare Kennedy, Form and Sub-
stance, supra note 26.
147. See Felix Cohen, Transcendental Nonsense and the FunctionalApproach, 35 COLUM. L.
REV. 809 (1935).
ple. 148 In the case of ambiguity, whether it be a rule or standard appli-

cation, the decision-maker works up a hierarchy of principles to find
t 49
the appropriate application or answer.
In contrast to Dworkin's internal examination, Llewellyn's idealism
is further grounded in real world contextualism. Through the interac-
tion of the patent reason of singing rules and the community morality
of situation-sense, Llewellyn sees the rules of contract constantly
evolving to fit and justify social reality. For Dworkin, the need for
constant rule reformulation is minimal because of the density of con-
tract law. Almost all of the time the rule needed to deal with a novel
situation already exists in the law. Through Hercules' theory building
exercise an appropriate fit of an existing rule is discovered. 150 In
short, the existence of rule conflict or rule-counterrule is unlikely
since the theory building exercise produces the one true rule and rule
fit.
Dworkin's theory building exercise is tested by a novel fact pattern
or hard case exposing a rule conflict or gap in the rules. But this expo-
sure is only a surface phenomenon. Hercules seeks the guidance of
the principles behind the conflicting rules or the surrounding rules in
the case of gaps. If this analysis fails to produce an answer then he
ascends to a higher level of abstraction-contract law's meta-princi-
ples. These meta-principles are used to fit and justify a rule applica-
tion in harmony with the whole body of contract law. The meta-
principles vary in different eras or theories of contract law. Under
classical contract theory, the meta-principles include freedom of con-
tract, plain meaning interpretation, and the sanctity of private will.
Parties had the expectation and right to strict and literal performance.
Under neoclassical or relational contract theory additional meta prin-
ciples are posed, including good faith, fair dealing, and liberalized ex-
cuse. Parties not only have a right to performance but also a duty to
cooperate and to adjust their demands and expectations.
In Dworkin's theory stare decisis plays an important role in con-
straining discretion and maintaining the integrity and internal logic of
the legal order. 151 However, the reading of past cases is not a purely
148. See RONALD DWORKIN, A MATTER OF PRINCIPLE (1985). "[Aldjudication is characteristi-

cally a matter of principle rather than policy." Id. at 3.
149. "[A]n interpretation of any body or division of law,.., must show the value of that
body of law in political terms by demonstrating the best principle or policy it can be taken to
serve." Id. at 160.
150. See Ronald Dworkin, Hard Cases, 88 HARV. L. REV. 1057 (1975) (Dworkin introduces
Hercules as the judge that hard cases are presented to for adjudication).
151. See Ronald Dworkin, Judicial Discretion, 60 J. PHIL. 624 (1963). Cf Kent Greenawalt,
Discretion and Judicial Decision: The Elusive Quest for the Fetters that Bind Judges, 75 COLUM.
2006] THEORY OF INTERPRETATION 45
descriptive undertaking. 152 It is also an interpretive undertaking that

requires the judge to develop the best interpretation of precedent
when fabricating a rule fit in the hard or novel case. Dworkin states
that "the nerve of my argument that the flat distinction between
description and evaluation on which skepticism relies is misplaced be-
cause interpretation is something different from both."' 153 It is this de-
scriptive-prescriptive blend that allows for an adjustment of a rule to
fit to the hard case. However, under Dworkin's theory, the prescrip-
tive portion of interpretation is constrained by the body of law as a
whole. An interpretation that produces a rule fit that is not consistent
with a large body of the existing law would be a false interpretation.
For example, a reformation of a contract term that evades an express
allocation of risk would be a false interpretation. 54
V. A THEORY OF INTERPRETATION
The earlier Parts of this article examined the realist critique of ab-
stract conceptualism, explored the tenets of Llewellynian jurispru-
dence and the important role of contextualism within it, and the
Dworkinian notion of theory building. This Part will build upon the
analysis of the earlier Parts by further exploring the interface between
the contextual meaning of a contract and the rules of contract law in
the notion of dialecticalconceptualism. Dialectical conceptualism uses
Dworkin's concept of theory building to extend Llewellyn's dual track
theory of interpretation. 55 It offers a reconstructed vision of contract
L. REV.359. (1975). Professor Greenawalt describes Dworkin's concept of coherence as a judge

giving effect "as objectively as he can to the values already implicit in the legal system." Id. at
396.
152. See Ronald Dworkin, Law as Interpretation,60 TEX. L. REV. 527 (1982). "[P]ropositions
of law are not simply descriptive of legal history ...[t]hey are interpretive of legal history..."
Id. at 528.
153. Id. at 546.
154. Critical legal studies scholars see Dworkinian theory building as masking contract law's
internal contradictions. The conflict thesis argues that the search for determinacy in the princi-
ples of contract law masks the contradictions that infect it all levels. Duncan Kennedy asserts
that "there are no meta-principles to explain just what it is about particular situations that make
them ripe for resolution." Kennedy, Form and Substance, supra note 26, at 1724. Furthermore,
the abstractionism of Dworkin's brand of legal idealism allows for the enforcement of contract
rules as exercises of rationality, objectivity, and neutrality. Dworkin's abstractionism masks the
fact that law is a product of political choice. Abstraction allows rules to be strictly applied in a
dispute between Part A and Party B. Such an acontextual rule application is impossible under
Llewellynian contextualism. The unveiling of Party B as an individual of inferior bargaining
power or a victim of overreaching unmasks law's neutrality. In the words of Roberto Unger:
"The real sovereigns that stand behind the demiurge are the interests that lead men to classify
things as they do." ROBERTO UNGER, KNOWLEDGE AND POLITICS 80 (1975). In short, Dwor-
kin's inner morality of law is the product of a particular social vision.
155. DiMatteo, Reason and Context, supra note 11, at 476-85
interpretation founded upon Llewellyn's contextualism and

Dworkinian idealism.
Dialectical conceptualism represents an attempt to bridge the con-
textual-conceptual mindsets. 156 Dialectical conceptualism is the form
of rule and contract interpretation that best describes Karl Llewellyn's
vision of contract interpretation and rule application. That vision
sought to better understand the proper relationship between concep-
tualism and contextualism. After fabricating the framework for this
theory of interpretation, the infancy law doctrine and the law of ex-
cuse will be used to apply dialectical conceptualism to existing con-
tract doctrine. The role of contextualism in this theory is examined in
the areas of promissory estoppel, expanded recognition of precontrac-
tual liability and implied contracts, and the greater enforceability of
gift promises. An analysis is then undertaken of the implications that
dialectical conceptualism poses for the reasonable person standard.
A. Rule Fit and Resolving Rule Non-Fit

A theory of contract interpretation ultimately needs to relate three
strata. First, from a bottom-up view, the real world produces disputes
over contractual meaning. Second, the context or factual background
of the dispute provides the data for the determination of the true
meaning of the contract. Third, courts look to the law to provide in-
157
terpretative guidance. This is the domain of concept application.
In this strata, the judge looks first to see if there is a particular "rule
fit" that provides a determinate answer. This is unlikely given the fact
that litigation is discouraged unless there is at least a plausible argu-
ment against a particular rule fit. The interpretive inquiry presented
in this section (dialectical conceptualism) uses the Code as the source
of law.
The lack of a particular rule fit can occur in two ways. First, the
context reaches an interstitial place within a rule (gap within the rule).
Second, the context reaches an interstitial place within the rules in
general (gap between or among rules). 158 In the second instance, the
156. The terms abstractconceptualism and dialecticalconceptualism are used also as a chrono-
logical demarcation. The former refers to the brand of conceptualism associated with the for-
malism of 1900. The latter refers to the brand of conceptualism at work circa 2000.
157. Llewellyn recognized this tension between the conceptual and the contextual sides of the
law. He describes the judicial process in the area of sales law as the "interplay of received rule
and concept with the urge of the case-law facts, and with the general background." Across Sales
on Horseback, supra note 8, at 727.
158. See generally Gedid, U.C.C. Methodology, supra note 137 (discussing the Code as com-
prehensive and unified; the use of coordination and superordination for handling conflicting
rules in the Code).
context elicits possible application of more than one rule. This is an

area of potential rule conflict. In either case, there is a lack of a direct
fit between a rule or group of rules and the context.
In the case of non-fit, the court will undertake an interpretative in-
quiry as to whether a rule or series of rules should be expanded or
contracted in order to solve the problem presented by the case. The
avenue for resolving issues of non-fit or gaps in the rules is the tapping
into the "P" behind the rules consisting of purpose, patent reason,
policy, and principles. The first two types of "P" (purpose and patent
reason) under Article 2 are what the judge initially looks to for inter-
pretive guidance in the application of a rule to a novel context. Al-
though more particularized principles and policies may be attached to
the different rules, the "Ps" of purpose and patent reason capture
Llewellyn's vision of a singing rule. "Principles" (and to a lesser ex-
tent policies) will be reserved to the relatively few meta-principles
that overlay the Code rules. They will be used to complete the model
of contract interpretation referred to here as dialectical conceptual-
ism. We will briefly postpone the place of principles or policies ("Big
P") until after further mapping the other pieces of the theory. The
next section will first compare the different ways abstract conceptual-
ism and dialectical conceptualism deal with the novel context and the
problem of rule non-fit.
1. Abstract Conceptualism Versus Dialectical Conceptualism

Under abstract conceptualism, a meaningful "P" is severed from its
underlying rule through a process of formalism. Rule interpretation
and application becomes a totally self-contained enterprise. The
judge must fabricate an interpretive application completely from a
textual reading of the rule and written contract (plain meaning rule).
In order to accomplish such an undertaking, and retain a degree of
logical integrity, the novel case is made to appear less novel. The nov-
elty of a case comes from the uniqueness of the context. By excluding
contextual evidence the conceptualist judge is able to narrow the
problem within the formal frame of the rules. He then weaves a read-
ing of the rule that provides a formal answer without addressing the
15 9
novel contextual issues that generated the non-fit in the first place.
It should be noted that the arbitrariness of context avoidance preva-
lent in the abstract conceptual system was at least partially mollified
159. This is what Clare Dalton has called "the method of hierarchy in duality [that] allows our
doctrinal rhetoric to avoid underlying problems." Clare Dalton, An Essay in the Deconstruction
of Contract Doctrine, 94 YALE L.J. 997, 1000-01 (1985) (Dalton's underlying realities being
masked are the problems of power and knowledge).
by structures within the system. For example, when context makes
freedom of contract rationales untenable the system provides nar-
rowly constituted exceptions such as fraud, duress, incapacity, and ex-
cuse. It also provided a roving interpretive escape hatch of implied
intent or lack of intent to be bound.' 60 These are what Duncan Ken-
nedy refers to as pseudo-resolutions.16 1 They are pseudo-resolutions
because they feedback into the same abstract-formal-indeterminate
structure of freedom of contract that they are attempting to mollify.
In the hands of the conceptualist, the exceptions act purely to mask
the absolutism of abstract conceptualism; at the same time they por-
tray a pseudo-sensitivity to the context of cases. 162
In contrast, dialectical conceptualism allows a free flow of context
into the case and discourages the type of formalism that characterized
abstract conceptualism. Llewellyn's attempt to create singing rules
and encourage purposive interpretation invited the folding in of novel
contextual evidence to give meaning to the rules. Llewellyn collapsed
the traditional verticality of principle to rule. The singing rule incor-
porates the reason or purpose within the rule. Thus, the search for
higher principle or abstraction is unnecessary.
2. Llewellyn's Free Flow of Context
There will generally be two contexts in all but the truly novel
caset 63-the particularized context of the individual case and the con-
text of situation-sense. In essence, Llewellyn built a second level over
the ground floor of factual context. Instead of proceeding upward
from case to rule to concept-principle, the direction is from case con-
text to situation context to rule to concept-principle. The particular
case is assessed for a similarity to a group or category of transactions.
Once placed within or near a category, the situation-sense provided by
that grouping is used to direct the court to rule fits previously ap-
plied.' 64 Situation-sense is the recognition that a case may be made a
160. Kennedy, Distributive and PaternalistMotives, supra note 26, at 582.

161. Id. at 682.
162. This is the notion of fabricating a wholeness of legal structure by masking its internal
contradictions. Duncan Kennedy, A Semiotics of Critique, 22 CARDOZO L. REV. 1147 (2001)
("dialectical transformation").
163. The "truly novel" case presents a fact pattern so different that it fails to relate in anyway
to existing transaction or situation-types. In such a case, the court may be prompted to recog-
nize the beginning of a new situation-type.
164. "The realist goal of grouping legal situations into 'narrower categories' that fit, that are
based on the actual commercial circumstances, has indeed been achieved . Wiseman,
Merchant Rules, supra note 81, at 538.
part of an ongoing development of commercial practice. As such, the

case is folded into an evolving rule-fit.
3. The Danger of Judicial Arbitrariness

The free flow of context anticipated in Llewellynian jurisprudence
is still susceptible to the danger of judicial arbitrariness. The danger is
in the fact that context may be fabricated by the judicial decision-
maker. 165 In abstract conceptualism the fullness of context was
avoided in order to maintain the formal conceptual apparatus. Con-
textualism opens the judge to additional data but the relevancy of that
data is judicially constructed. The opening up of rule application to
context is unlikely to deter the conceptualist judge from continuing
work within a self-contained pyramid of abstraction.
However, Llewellyn jurisprudence attempts to minimize the judicial
temptation to partake in arbitrary construction necessary to maintain
the doctrinal purity advanced by abstract conceptualism. 166 The na-
ture of singing rules provides the judge with the patent reasons that
allow for rule adjustment. The singing rule's inherent flexibility al-
lows for overt tailoring to contextual novelty. The covert means of
adjustment that characterized legal formalism have no place in such
an interpretive methodology. Rules that provide patent reason allow
for theory building without resorting to broader principles or abstrac-
tions. Such reason-induced rule application creates the type of rule fit
that allows the law to evolve to meet changing commercial practices.
165. "[Tlhe particular fact situations decision-makers construct from the testimony submitted
to them, requires us to search for other explanations." Dalton, Deconstruction of Contract,
supra note 159, at 1010. Compare Todd D.Rakoff, The Implied Terms of Contracts: Of 'Default
Rules' and 'Situation-Sense', in GOOD FAITH AND FAULT IN CONTRACT LAW 191, 222 (Jack
Beatson & Daniel Friedmann, eds. 1997) (1995). Professor Rakoff argues that there are two
constraint to liberal-conservative "wobble" in the fabrication of context. First, the situation-type
is constructed upon actual situations that have "some preexisting structure ... that is hard to
fake." Id. Second, the institutional restraint of "craft criticism." Id. See also Todd D. Rakoff,
Social Structure, Legal Structure, and Default Rules: A Comment, 3 S. CAL. INTERDISC. L.J. 19
(1993) (the construction of legal categories is partially an adoption of roles and transactions
defined by society). Thus, a judge's ability to construct a context that allows for an arbitrary rule
fit may succeed in the ad hoc case but not in a class or category of such cases.
166. Lawrence Friedman assessment of the role of in regulating contracts is supportive of this
claim. "When old theories had been taken apart brick from brick, there was nothing to stop the
court from doing directly, what it sued to do by indirection." LAWRENCE M. FRIEDMAN, CON-
TRACT LAW IN AMERICA 215 (1965). Once the edifice of abstract conceptualism was removed,
"the court paid ever more attention to the particularities of the situations before." Id. Although
this speaks to the increased role of contextualism, Friedman's reference to fairness indicates that
the focus is on what Llewellyn denigrated as "fireside equities." For Llewellyn's situation-sense
was not aimed at ensuring the fairness of the particular case, but the rightness of commercial
practice over the long haul. "[T]he sense of the type-situation, where it can be tapped, outranks
and outshines any 'fireside' stuff." COMMON LAW TRADITION, supra note 9, at 245.
B. Dual Track Theory of Interpretation

The process of fitting and justifying a rule not only requires an in-
terpretation to fit and justify the particular class of cases or problems,
but also to fit and justify all types of cases that the rule is expected to
cover. An example is demonstrated in justifying the exceptions to the
Statute of Frauds. The reasons for hinging the enforceability of cer-
tain contracts on the existence of a written instrument include preven-
tion of fraud, along with the promotion of channeling and cautionary
concerns.1 6 7 In certain types of cases the requirement works an injus-
tice that may dictate an adjustment to the rule. However, any such
adjustment must be justified by a modified version of the rule that
produces a better overall rule fit.
The cases of injustice that troubles courts were ones where the
plaintiff's actions were hard to explain but for the defendant making a
promise upon which the plaintiff relied or cases where the defendant
received a large benefit at the plaintiff's expense. A rule adjustment
to allow the enforcement of such promises would seem to create a
better rule fit for these types of cases. However, such an adjustment
to the Statute of Frauds could cause a non-fit in other cases covered
by it. For example, if the promise relied upon was for an employment
contract of five years, then a rule adjustment that fails to address the
overarching reason for the rule would cause non-fit elsewhere and
must be rejected. 168 Thus, a rule adjustment or exception to elevate
an injustice in one area is precluded if it undermines the rule's pur-
pose in other types of cases. The requirement of a writing in the five
year employment agreement scenario serves to advance the eviden-
tiary rationale that underpins the Statute of Fraud's mandate that con-
tracts that cannot be performed within one year need to be in writing.
At the same time, the requirement bolsters the judicial enforcement
of the employment at will principle.
1. The Second Track: Applying "Big P"

There still remains the possibility that the purposive expansion or
contraction of a rule in response to contextual meaning will produce
an undesirable result. Undesirability needs to be defined in order to
proceed. Assume, from the perspective of rule to context or from the
perspective of a system of interrelated rules, a purposive rule fit is
167. Fuller, Considerationand Form, supra note 59.

168. This example was taken from Rule of Law, supra note 7, at 1264. It should be noted that
the although the injustice that the rule adjustment sought to avoid did not result in a formal
adjustment of the Statute of Frauds it has been given relief through application of the indepen-
dent rules of promissory estoppel and unjust enrichment.
achieved. The rule application is justifiable from the perspective of

freedom of contract or the enforcement of the true understanding of
the parties. Nonetheless, the concrete result has a taste of social unac-
ceptability. An example of this would be the development of a trade
usage or custom that is unfortunate from the point of view of morality
or efficiency. Put simply, how does a court deal with bad business
practice?
Faced with such a result, the court will need to undertake a second
level interpretive inquiry. This is where "Big P" comes into play. "Lit-
tle P" relates to the underlying principles or policies that inform spe-
cific rules. "Big P" refers to overarching principles of greater
abstraction that are transubstantive169 in nature-occupying the entire
area of law (contracts or sales). The incorporation of meta-principles,
such as good faith, 170 fair dealing,' 7 1 unconscionability, 72 and ex-
cuse, 73 provides a type of Dworkinian umbrella.1 74 The judge in the
case of an undesirable result, can theory-build to justify the non-appli-
cation or modification of the rule to the given context. If the contex-
tual analysis provides an understanding that is based upon prior
dealings or trade usage that produces overreaching, windfall, or rela-
tional abuse, then the judge can see if the enforcement of that inter-
pretation conforms to the institutional morality represented by the
Code's meta-principles. The meta-principles are used to fabricate a
more particularized P to fit and justify a reconstructed rule.
This type of rule construction through theory building utilizing Big
P is premised upon the availability of the principles to fit and justify
any novel fact pattern. But, what if the Code's meta-principles fail to
support a rule reconstruction? The Code provides an alternative ave-
nue for the judge to find principles to fit and justify rule reconstruc-
tions. For example, Section 1-103 expressly authorizes the adoption of
169. Rosen, What Has Happened to the Common Law?, supra note 135, at 1165.
170. U.C.C. § 1-202 (2004).
171. Id.
172. U.C.C. § 2-302 (2004).
173. U.C.C. § 2-615 (1998).
174. See generally Ronald Dworkin, Hard Cases, 88 HARV. L. REV. 1057 (1975); RONALD
DWORKIN, LAW'S EMPIRE (1986). See also CHARLES FRIED, CONTRACT AS PROMISE: A THE-
ORY OF CONTRACTUAL OBLIGATION (1981) (Dworkin-style theory building of contract law). It
is important to note here the Critical Legal Scholars attack on Dworkinian theory building. In
short, the indeterminacy of rules is not overcome by Herculean theory building. Because for
every principle there is a counter-principle; for every theory a counter-theory. Ultimately, the
principle of theory chosen is a matter of ideological choice. See generally DUNCAN KENNEDY, A
CRITIQUE OF ADJUDICATION (Fin De Siecle) (1997) (showing that a judge with an ideological
preference for an outcome can work to make that outcome law); ROBERTO M. UNGER, KNOWL-
EDGE AND POLITICS (1975); Andrew Altman, Legal Realism, Critical Legal Studies, and Dwor-
kin, 15 PHIL. & PUB. AFF. 205 (1986) (summarizing CLS critique of Dworkin).
"principles... of equity.' 175 A comment to Section 2-615 further ex-

presses the need to work into deeper structures of the common law to
instill additional meaning to the Code's meta-principles. It states that
it is the general policy of the Code "to use equitable principles in the
76
furtherance of commercial standards and good faith.'
It needs to be stressed that this type of reasoned analysis is exactly
what Llewellyn attempted to foster with his methodology of situation-
sense (contextualism) and singing rules (patent reason). A simple ap-
plication of a fixed rule, except in cases of formality, have no place in
his theory of legal interpretation. 177 Llewellynian interpretive meth-
odology requires that rules and decisions exhibit the reasons behind
their words, and, if necessary, to explore deeper structures of purpose.
In such an exploration he believed that the rules are able to respond
to novel or hard cases.
C. Interpretation as Exercise in Theory Building

Both Llewellyn and Dworkin view the proper interpretation of law
and its application to the particular case requires an exercise in theory
building. What separates Llewellyn's methodology from Dworkin is
his contextualism. For Dworkin, rules are framed solely by using law's
internal morality. Llewellyn's contextualism bridges the gap between
community morality (situation-sense) and law's morality (patent rea-
son). For Dworkin, the meta or general principles of a body of law
(Big P) are acontextual. For Llewellyn, general principles like rules
are context dependent. What is good faith or unconscionable for one
situation-type is not necessarily so for another type.
For both Llewellyn and Dworkin, rules are not the operative fea-
ture of the law's internal morality. For Llewellyn, it is the reason be-
hind the rule; for Dworkin, it is the relatively stable but more
abstracted higher principles. Such higher principles for Llewellyn
were matters of last resort. Properly constructed singing rules would
normally be sufficient to satisfactorily fit and justify most rule applica-
tions. However, such construction is never complete-"a rule never
rises to the full level of a rule. ' 178 The combination of reason behind
175. U.C.C. § 1-103 (2004). See generally Robert S. Summers, General Equitable Principles
Under Section 1-103 of the Uniform Commercial Code, 72 Nw. U. L. REV. 906 (1978).
176. U.C.C. § 2-615, cmt. 1 (1998). See generally LARRY A. DIMATTEO, EQUITABLE LAW OF
CONTRACTS: STANDARDS AND PRINCIPLES (2001) (historical review of the role of equity in con-
tract law).
177. This use of principles reasoning is found in both Dworkin and Llewellyn's interpretative
methodologies. The difference is that Llewellyn recognizes an element of choice that Dworkin
disdains. See Frederick Schauer, Formalism, 97 YALE L.J. 509, 519 (1988).
the rule, novel fact patterns, and evolving situation-types implies that
adjudication is a continuing process of rule improvement or updating.
1. Transformative Nature of Law

Another point of departure between Llewellynian and Dworkinian
theory building is the ultimate product of the exercise. The strongest
version of Dworkin's right answer theory believes that the right the-
ory will lead Hercules to the one right answer. Llewellyn is more
skeptical of the process. He sees any talk of one right answer as a
fiction of abstract conceptualism. However, he does see a benefit to
the fiction. It serves as a "fictional frame of discourse" or "ideal to
unchain constant effort.' 79 Doctrine and rules are pluralistic by na-
ture, and will remain so. A combination of that pluralism and the
ideal of systemic coherence provide the motive force for assimilating
dynamic social context within a relatively stable, functional legal
order.
Llewellyn's primary construct is that law is not transformative in
nature; rather law flows from commercial-social reality.1 80 The sing-
ing rule allows that social law to be transformed into legal rule. But
this popular view of Llewellynian realism is overdone. He did see a
role of law in fostering good commercial practice. 18 1 In addressing the
need for a Uniform Commercial Code in 1940, Llewellyn noted that
"large portions of [sales] law can be put into terms which afford mate-
rial guidance to the layman in the doing of his commercial busi-
ness."'1 82 In The Cheyenne Way, Llewellyn intimated that in the hard
case the law's transformative potential comes to the surface. "[A]
179. Llewellyn, Problem of Juristic Method, supra note 10, at 1365.

180. Contra Ingrid Michelsen Hillinger, The Article 2 Merchant Rules: Karl Llewellyn's At-
tempt to Achieve The Good, The True, The Beautiful in Commercial Law, 73 GEO. L.J. 1141
(1985). Professor Hillinger argues that Llewellyn's Code was primarily a reflection of what he
thought commercial practice should be. In short, rules like the written confirmation rule were
not written so much to recognize commercial practice but to create a merchant duty. She argues
that "the Article 2 merchant rules do not codify trade custom and usages. They codify Llewel-
lyn's law of merchant's peculiar obligations." Id. at 1181. She further states that many Code
provisions "articulate what Llewellyn believed to be sound, rational commercial rules. They do
not reflect actual business conduct but rather adopt Llewellyn's ideal business conduct." Id.
181. See generally Wiseman, Merchant Rules, supra note 81, at 494 ("Llewellyn's vision ...
was at least partially a prescriptive conception of merchant reality"). See also id. at 505. In his
1941 "Report of the Special Committee on a Revised Uniform Sales Act," Llewellyn states that
it is the policy of the Act that "general practice, shall not overstep the bounds of... reasonable
balance and fairness[; to that end] appellate courts are made the guardians to keep improper or
unfair mercantile practices, however pervasive, from encroaching upon the polices declared in
the Act." THE REVISED UNIFORM SALES Acr, supra note 38, at 29.
182. Memorandum to NCC, "Possible Uniform Commercial Code," in TwINING, THE REAL-
IST MOVEMENT, supra note 2, at 525.
trouble-case drives so strongly toward becoming a precedent gives the

imperative or standard repeatedly to leap ahead of the actual behavior
pattern-not to flow from a behavior pattern, but perhaps to create a
pattern on the model of even a single instance. ' 18 3 Once again, in
selling his Uniform Commercial Code in 1954, he states that there is a
need to cure "the continuing presence in the law of technical traps
which can ...be used in bad faith to do outrage." 184 One can argue
that if he believed that poorly formulated law could induce bad faith,
then the opposite also holds true.
The clearest expression of Llewellyn's view of the transformative or
critical role of contract law can be seen in his analysis of standard
form contracting:
[It is the role of the judge through contract law to] see that free
contract presupposes free bargain, and that free bargain presup-
poses free bargaining ... The background of trade practice gives a
first indication [of the reasonableness of a term]; the line of author-
ity rejecting unreasonable practice offers the needed corrective....
Courts' business is not the making of detailed contracts for parties;
but courts' business is eminently the marking out the limits of the
permissible, and the reading of fair understanding ...185
In contract law interpretation, the reasonable person standard 186 has
been used for the marking out process. The reasonable person is im-
bued with the totality of the circumstances 18 7 including the back-
ground of trade usage and custom. Llewellyn viewed the reasonable
person standard as both a descriptive and normative undertaking.' 88 It
functions not only to uncover the is of the transaction but also to mark
off the impermissible.
For Llewellyn, bad business practice that was clearly bad was not a
major issue under his contextual system. Business practice that is a
product of bad faith is likely to be idiosyncratic and would probably
183. THE CHEYENNE WAY, supra note 3, at 287 (emphasis added).

184. Statement to the Law Revision Commission, in TwINING, THE REALIST MOVEMENT,
supra note 2, at 537.
185. Karl N. Llewellyn, Book Review, 52 HARV. L. REV. 700, 704 (1939).
186. See infra Part IV.F. See generally Larry A. DiMatteo, The Counterpoise of Contracts:
The Reasonable Person Standard and the Subjectivity of Judgment, 48 S.C. L. REV. 293 (1997)
(traces sources and composition of reasonable person standard).
187. Id. at 318-25. An Official Comment to Section 1-205 of the Code states that the language
found in a contract shall be "read and interpreted in the light of commercial practices and other
surrounding circumstances." U.C.C. § 1-205 cmt. 1 (2004).
188. I discussed the transformation of the descriptive to the normative reasonable person in a
previous article: "The barometer of custom and usage provides insight into the is [true under-
standing] of what the parties intended. It also provides a measurement for what the community
believes the contractual terms should mean." DiMatteo, Counterpoise of Contracts, supra note
186, at 330.
stink of "badness." Such egregious, particularized forms of conduct

would be relatively unproblematic for the law to reject. The court
could look to their idiosyncratic nature to preclude their elevation to
reasonable trade usage or custom in the first place. If this particular-
ized thesis is untenable, then the meta-principles of good faith and fair
dealing would provide a good fit for their non-enforcement or adjust-
ment. What most concerned Llewellyn is the re-enforcement of ineffi-
cient business practice. This was the more difficult issue for the Code
and provided a transformative challenge to contextualism. The next
section's discussion of good faith and fair dealing as being related to
both institutional and community moralities provides additional in-
sight into to the law's response to this challenge.
2. Institutional Versus Community Morality
One issue remains: Are the Code's meta-principles a part of institu-

tional morality or simply a reflection of community morality? This is
a perplexing problem-one in which we will venture some specula-
tion. For purposes of simplicity, we will pick the principles of good
faith and fair dealing to discuss. Are the Code's principles of good
faith and fair dealing in the performance and enforcement of contracts
part of the law's internal morality or are they a reference to the com-
munity's morality (business reality)? The answer is both. Good faith
and fair dealing affect the application of all the Code provisions or
rules. They are therefore part of the internal morality of the Code.
They also relate to the community's view of a given practice or devia-
tion from a certain practice. The characteristic of community is im-
portant in this regard. Since bad faith or inefficient practice is a
reflection of a specific community, it is also a reflection of that com-
munity's morality. However, contextualism allows for the expanding
of the community to check the true nature of a given practice. The
practice that is condoned in a particular business or trade can be con-
demned as abusive when held to the standard of good faith adhered to
by the more general business community.
Seen as serving both law's and community's morality supports the
dual role of such principles in Llewellyn's contextual system. The
"goodness" of a certain practice or usage can be measured against the
good faith principle as a reflection of the real world morality of ex-
panded communities. Good faith as legal concept or principle can be
used to theory build within law's internal morality. The contextual
flow into the rule can be redirected upward into the meta-principles to
see if an adjustment to the rule in the particular case is dictated.
As mentioned earlier, the device of situation-sense is part of Llew-

ellyn's contextual system. It can be viewed as a factual check on the
digression of Big P into transcendental nonsense. The abstractness of
principles like good faith and fair dealing are made more particular-
ized by the contextualism of situation-sense. It is in this way that Big
P is reduced to a Small P rationalization for the particularized rule
adjustment. Alternatively, the meta-principles can be used as what
Lon Fuller referred to as doctrinal bridges 89 to justify an adjustment
of a rule or a denial of contextual meaning. The Big P provides the
doctrinal bridge lacking in Small P in order to change a rule interpre-
tation despite the existence of a rule fit.
D. Llewellyn Theory Building and the Dual Track

Theory of Interpretation
To summarize, Llewellynian theory building runs on two tracts-the

factual and the conceptual. The theory building nature found in Llew-
ellyn's contextualism and rule reason is made clear towards the end of
The Common Law Tradition:
No rule or principle can ever,. . . , tell any court, in concretely defin-
itive terms, what scope the problem situation before it has, or, more
accurately, is best made to have.., the problem situation extends as
far as you have grasped the picture fully and completely in life-es-
sence and in its detailed variants.. . it is wise to deal with it, because
small things take fuller meaning in the context of greater ones. And
also because the law does well to trend into ever larger unities, so
long as they remain meaningful as they grow. But those unities must
be and remain meaningful, over the whole scope, in terms of life
and sense, not merely in terms of formula. . . [or] else they do harm.
That is why a court is doing its duty when... it goes to bat on the
whole of a broad situation. 190
But that is also why any doubt about whether the court has the
whole situation in sure grasp is to be resolved by the court always in
favor of a narrowerrather than a wider scope. When felt mastery is
present, wide scope is indeed not only sound; it verges on duty.
Precedents are always needing synthesis into rules which make bet-
ter sense for a whole situation-type, for a whole set of really or
seemingly variant decisions. Rules, too, are always needing to be
regrouped and rephrased around principles which can guide
189. Lon Fuller, American Legal Realism, AM. PHIL. Soc'y 191, 208 (1936). Pound acknowl-
edges that general provisions often act as doctrinal bridge substitutes. "Where a large number of
general provisions are available, as they are in most codes, 'doctrinal bridges' are not necessary."
Id. Llewellyn recognized Fuller's conceptual bridge as a "neat observation." COMMON LAW
TRADITION, supra note 9, at 59.
2006] THEORY OF INTERPRETATION 57
through still wider situations in terms of surer sense. But, just as
truly, facts are constantly emerging which call for sub-division and
distinction even within those older, wider rules and categories...
Which way to do the growing ... that is a question of sense... 191
The preference for the "narrow" is the essence of situation-sense

modeling. But the construction of the narrow with the advent of
novel fact patterns and new situation-types is accomplished through a
ground-level look at social roles and transaction-types and an upward
look for conceptual coherence. This coherence is found in the reasons
behind the rules, principles, and meta-principles of contract law. Inco-
herence is produced by a divergence of the legal and the social. This
occurs when rule application is produced through an abstract hierar-
chy uniformed by social context, and results in the formalistic applica-
tion of fixed, unitary rules to different situation-types.
E. Reconstructing Contract Doctrine

The above-described theory of interpretation can be utilized to re-
construct existing doctrine and rules that fail to provide a proper fit
between theory and rule application. 192 This reconstruction can be
accomplished by theorizing from cases in a piecemeal restructuring or
as part of a broader reform project. Three examples will be used to
examine the evolution of contract doctrine through the prism of dia-
lectical conceptualism: (1) infancy law doctrine, (2) law of excuse, and
(3) promissory estoppel. In the area of promissory estoppel, the im-
pact of the doctrine on the areas of precontractual liability and gift
promises will be explored.
1. Reconstructing the Infancy Law Doctrine

The areas of per se rules in contract law seem open to reconstruc-
193
tion. The infancy law doctrine is an example of such a per se rule.
The fragmented, conflictive state of this common law doctrine makes
191. Id. at 427-428.

192. In the opening pages of The Cheyenne Way Llewellyn and Hoebel allude to a process of
theory building akin to that of Dworkin:
The best one can do is to try to make his own conceptual structure somewhat explicit,
so that the reader may be warned by it. If that be done, and if that structure be taken,
so far as may be, not as a something given in nature, but as a working hypothesis, then
it may be possible to let any odd, sharp corners of the cases be felt and continue to be
felt in whatever intellectual discomfort they may offer, until the conceptual frame re-
shapes itself to hold all the cases. ...
THE CHEYENNE WAY, supra note 3, at 19 (emphasis added).
193. Another example is the per se rule against the assignability of personal service contracts.
See generally Larry A. DiMatteo, Depersonalizationof Personal Service Contracts: The Search
for a Modern Approach to Assignability, 27 AKRON L. REV. 407 (1994).
it susceptible to reconstruction through a process of contextual theory

building. The infancy law doctrine in its pristine form holds that
someone under the age of majority may disaffirm her contracts with-
out consequence (penalty). 194 It allowed a minor within a reasonable
time after reaching the age of majority to void her contracts and re-
ceive full refunds of any monies paid. The ancient lineage of this pa-
ternalistic doctrine has lost touch with the socioeconomic condition of
minors in the modern world. The law's response has produced a
patchwork of sub-doctrines that continue to pay homage to the pris-
tine version. The attempt to bridge the gap between the social reality
of minority and legal doctrine through the use of exceptions has pro-
duced a chaotic jurisprudence. The result is the replacement of the
majority rule with an ever-growing set of minority rules and doc-
trines. 195 The marginal protection of minors offered by such doctrinal
chaos, and its divergence from social reality, has rendered the doctrine
unable to fit and justify case decisions.
The unmasking and reconstructing offered by situation-sense and
theory building is one alternative. The per se rule of disaffirmance
needs to be replaced by a case-by-case rebuilding of the law. The pro-
cess begins with an acknowledgement that incapacity is an exception
to contract law's core premise of freedom of contract. A number of
the sub-rules-the necessities, emancipation, and misrepresentation
doctrines-simply become part of the contextual analysis. The com-
peting policies and principles should be laid bare. They include the
need to protect minors from unscrupulous adults, the need to protect
innocent adults from the "offensive use" of the infancy doctrine by
savvy minors, the freedom-limiting nature of incapacity, and the role
of parental responsibility. On balance, the elimination of the infancy
law doctrine may better reflect society's view of minor accountability
and parental responsibility. The better rule fit would then replace the
per se rule of incapacity with a presumption of enforceability premised
upon a full contextual analysis. The rule could be coupled with an
exception or the use of a meta-principle to police the application of
the presumption.
2. The Reconstruction of Excuse

The historical evolution of the excuse doctrines in Anglo-American
law also illustrates the process of situation-sense confronting existing
194. See generally Larry A. DiMatteo, Deconstructingthe Myth of the 'Infancy Law Doctrine':
From Incapacity to Accountability, 21 OfIo N.U. L. REv. 481 (1994).
195. These include the necessities doctrine, benefit rule, depreciation rule, misrepresentation
of age exception, and the emancipation doctrine.
doctrine and producing reconstruction. 196 Excuse is a doctrinal excep-

tion to the primary rule of paying compensatory damages for all
breaches of contract. A party is obligated to honor her contractual
promises or pay damages. Excuse as exception to pacta sunt servanda
holds that where the breach is involuntarily rendered and not the fault
of the breaching party, then it is unjust to force her to honor the con-
tract or to pay damages. Initially, the common law's lone excuse doc-
trine required objective impossibility in order for a party to be
relieved of contractual liability. One can then imagine the develop-
ment of factual situations that challenged the fit of such a strict excuse
rule to social reality. These cases sought to reject the "objectiveness"
of impossibility and provide an excuse where performance although
not objectively impossible has become functionally irrelevant. The
English coronation cases 197 where a premium is charged for hotel
rooms for purposes of witnessing the coronation of a king or a queen
were the hard cases of change. When the coronation is delayed the
purpose of the contract, along with its premium rate, were frustrated.
Moving behind the impossibility doctrine to principle and purpose,
the novel fact patterns prodded a reconstruction or expansion of ex-
cuse into the realm of commercial frustration. A more rational law
would excuse a party who is prevented by unforeseen, external events
from performing or from reaping the expected benefits of perform-
ance. It is also recognition that not all breaches are the same using a
culpability measurement and therefore, the law should be made to fit
and justify the enforcement of some breaches and the non-enforce-
ment of others. The frequency of frustration cases eventually pro-
duced a category or situation-sense. The reason behind the existing
excuse doctrine of relieving an "innocent" non-performing party was
applied to reconstruct-fit and justify-a parallel excuse of frustration
of purpose.
To carry the analysis further, one can envision a series of fact pat-
terns where performance has not been rendered impossible, nor has it
been "objectively" frustrated, but nonetheless social reality, and possi-
bly commercial custom, questions the strict enforcement of a contrac-
tual obligation. In these "novel" cases the underlying requirements of
non-foreseeablility and non-fault are present, but the performance is
still performable and the receiving party still wants performance.
Therefore, the rule fit diverges from the social reality. Thus a new
196. For other examples of situation-sense and its role in legal theory building see Rakoff,
supra note 126 (evolution of substantial performance doctrine); HUGH COLLINS, REGULATING
CONTRACTS 189-92 (1999) (promissory estoppel doctrine).
197. See Krell v. Henry, 2 K.B. 740 (Eng. C.A.1903).
situation-sense calls for a reconstruction or expansion of the rule.

This new rule of excuse would allow for the voiding or reforming of
contracts that because of external occurrences have been rendered im-
practicable to perform. The principled broadening of the base of the
excuse rule allows for the law to fit and justify different fact categories
or situation-senses.
The enactment of the doctrine of impracticability in Section 2-615
of the Code can be seen as an example of the adaptive characteristic
of law or the transformative power of law. The adoption of Section 2-
615 can be used to illustrate possible relationships of law to society.
Hypothetically, Llewellyn's review of commercial practice may have
uncovered a custom or usage whereby merchants voluntarily released
each other from contracts when they have been rendered commer-
cially impracticable to perform. In such a scenario, Section 2-615
would be an example of contract rules adjusting to commercial reality.
In an alternative scenario, Llewellyn's search of commercial practice
saw no clear usage but a muddle of different practices. He saw, possi-
bly as a matter of good faith, the release of contractual duties under
such situations as the better practice. In this way Section 2-615 would
be an example of the transformative power of the law.
If we take the reconstruction of the excuse doctrine a step further,
we see a court faced with a situations-sense involving a long-term sup-
ply contract. Owing to a historically high increase in the cost of a
component, the contract has been rendered unduly burdensome to the
supplier. However, the long-term nature of the relationship and the
supplier's financial commitment and dependency on the contract
questions the rule fit of granting an excuse. The issue then shifts from
promisor excuse to promisee duty. Should the law require the prom-
isee to adjust the contract to maintain its viability to the promisor? 198
One approach that would seem to be a good fit in a realm of contextu-
alism is to be guided by the purpose or spirit of the contract. What
were the goals of the parties in entering such a long-term contract?
Would these goals be served by forcing the party to perform under the
strict terms of the contract (promisee perspective) or by providing an
excuse out of the contract (promisor perspective)? Would forcing the
promisee to adjust the contract better preserve the goals of the con-
tract, rather than strict enforcement or outright excuse? The ALCOA
198. See generally Robert A. Hillman, Court Adjustment of Long-Term Contracts: An analysis
under Modern Contract Law, 1987 DUKE L.J. 1 (argues for a duty to adjust in certain situations).
Contra Clayton P. Gillette, Commercial Rationality and the Duty to Adjust Long-Term Contracts,
69 MINN. L. REV. 521 (1985) (no duty to adjust).
v. Essex Group, Inc.199 court performed such an inquiry in asserting a

duty to adjust. "The court gave close attention to the legitimate busi-
ness aims of the parties and the need to frame a remedy to preserve
the essence of the agreement. To that extent this decision exemplifies
the new spirit of contract law." 20 0 The facts of particular cases and the
situation-sense type of long-term, relational contracts are likely to
continue to play important roles in the adjustment of excuse and the
20 1
law's remedial response.
3. Expansion of Contractual Liability: Promissory Estoppel,

Precontract, Implied Contract, and Gift Promises
Unlike other theories or approaches related to contract interpreta-
tion, dialectical conceptualism in general, and the contextualism it
promotes, provides the mechanism rather than the rationale for ex-
pansive enforceability in the areas of promissory estoppel and the re-
lated areas of precontractual liability, implied contract, and gift
promises. This section will offer some insight into the role of theory
building and contextualism in the areas of precontract, implied con-
tracts, and gift promises. The contextual track allows for the freer flow
of evidence to support claims of reliance under the theory of promis-
sory estoppel and thereby the rationales for the greater enforcement
of precontractual and gift promises, along with the increased recogni-
tion of previously unenforceable obligations represented by the ex-
pansion of implied-in-fact contracts. The conceptual track allows for
the use of meta-principles, such as fair dealing, good faith, and reason-
ableness, to provide the express rationales for expanding the safety
202
net of contractual liability.
Promissory estoppel necessarily requires the more liberal admissi-
bility of extrinsic evidence and the expansion of contract-based ratio-
nales into the area previously characterized as noncontract:
The most wide-ranging effect of contextualism is the allowance of
the entrance of a pre-contractual promise through the backdoor of
contract interpretation. Evidence of promises made during the ne-
gotiation stage, formerly precluded by strict application of the plain
199. 499 F. Supp. 53 (W.D. Pa. 1980).

200. Id. at 91 (emphasis added). See generally Richard E. Speidel, The New Spirit of Contract,
2 J.L. & COM. 193 (1982); John P. Dawson, Judicial Revision of FrustratedContracts: The United
States, 64 B.U. L. REV. 1 (1984).
201. "Conflicts can be resolved by responding to the type of transaction involved and resort-
ing to equitable principles when needed." Richard E. Speidel, Contract Formationand Modifi-
cation Under Revised Article 2, 35 WM.& MARY L. REV. 1305 (1994)
202. The meta-principles have also provided the rationales for an expansion of limiting doc-
trines, such as economic duress and the liberalization of contractual excuse as discussed
previously.
meaning and parol evidence 2rules are now admitted as evidence to
'clarify' the written contract. 0 3
In a broader way contextualism made possible the rise of reliance
theory and the expansion of the good faith performance doctrine.
As contractual liability increasingly began to hinge on the reasona-
ble expectations of the promisee and not the plain meaning of the
words of the promisor, contextual evidence became imperative in
order to prove reasonable reliance. Good faith as embodied in the
Code necessarily requires a contextual inquiry. The acontextual na-
ture of classical contract law and its fixation on contract language
retarded4 the evolution of a thicker conceptualization of good
20
faith.
The loosening of the evidentiary threshold and the acceptance of
the need to protect reliance or the reasonable expectations of the
promisee resulted in the expansion of contractual liability. The need
to enforce promise coupled with the need to protect reliance allowed
for more expansive use of meta-principles like fair dealing, good faith,
and prevention of injustice. This expansion has manifested itself in a
number of ways including, the enforcement of promises not encased in
an agreement or not supported by legal consideration (donative
promises), the blurring of the line between precontract and contract
(precontractual liability), the weakening of the power of integration to
prevent the admission of precontractual promises in contract interpre-
tation (studied ambiguity), and the expansion of implied contracts,
most notably in the area of employment 20 5 and the creation of sui
generis types of contract relationships, such as franchising and
distributorships.
One can offer a number of characterizations regarding the impact
of the recognition of meta-principles, such as good faith, and the
greater use of context on the line between contract and noncontract.
Here are a few. It is relatively easy to suggest that the line between
contract and precontract has moved in that what was needed to prove
a contract under classical contract law (definiteness of terms) has
weakened to the point where contract has expanded into areas previ-
ously considered precontract. 2°6 An alternative characterization sug-
gests that the primary impact of new meta-principles and
203. Reason and Context, supra note 11, at 474.

204. Id. at 475.
205. See generally Julia Barnhart, Comment, The Implied-in-Fact Contract Exception to At-
Will Employment: A Callfor Reform, 45 UCLA L. REV. 817 (1998); Deborah A. Schmedemann
& Judi McLean Parks, Contract Formationand Employee Handbooks: Legal, Psychological,and
Empirical Analyses, 29 WAKE FOREST L. REV. 647 (1994).
206. See, e.g., E. Allan Farnsworth, PrecontractualLiability and PreliminaryAgreements: Fair
Dealingand Failed'Negotiations,87 COLUM. L. REV. 217 (1987) (discussing intermediate regimes
between negotiations and ultimate agreement).
contextualism has not so much been the movement in the line of con-
tract formation but in the development of different remedial regimes;
that contract remedies (expectation damages, specific performance)
have simply been supplemented by precontractual remedies (reli-
ance). A simpler explanation is that the increased use of promissory
estoppel in the areas of precontractual liability and gift promises is a
result of the increased level of complexity in modern contracting. The
use of negotiation blueprints and memorialization-inducing devices
such as preliminary agreements, agreements to agree, detailed letters
of intent, comfort instruments, 20 7 along with the increased complexity
and formalization of charitable donations, have rendered the definite-
ness requirement of classical contract obsolete. In effect, the common
law of contracts can be seen as simply catching up with the Code's
jettisoning of the notions of materiality (implication of all necessary
terms) and formality (weakening of Statute of Frauds and considera-
tion requirements).
F. Reasonable Person and the ContractualShelf
Contract interpretation as envisioned by the objective theory of

contracts requires a neutral, objective interpreter. This interpreter is
embodied in the reasonable person standard. The reasonable person
replaces the actual contractual selves represented by the subjective,
internal interpretations of the contracting parties. The contractualself
can be seen as a device to expand the scope of the reasonable person
standard in contract interpretation. Dialectical conceptualism does
not question the central place of the reasonable person standard in.
contract interpretation. It does impact the fabrication and application
of the standard. It envisions a broader version of the reasonable per-
son. The notion of the contractual self represents that broader version
of the reasonable person standard.
The reasonable person of contract interpretation has always been a
contextual undertaking. The contractual self takes Llewellynian con-
textualism and extends it to a natural conclusion. Defining the con-
tractual self is central to understanding the relationship of the theory,
rules, and practice of contract law.20 8 It is also essential that any the-
207. See Larry A. DiMatteo & Rend Sacasas, Value and Credit Comfort Instruments: Crossing
the Line from Assurance to Legally Significant Reliance and Toward a Theory of Enforceability,
47 BAYLOR L. REV. 357 (1995).
208. "Whether the self is viewed as the antecedently individuated personification of Rawlsian
and Kantian moral philosophy or represented by the more communitarian view of the self as
communally constituted is central to how the institution of contract impacts contract as prac-
ticed." DIMATrEO, EQUITABLE LAW OF CONTRACrS, supra note 176, at 269.
ory of contract interpretation account for such a mechanism of inter-

pretation. For example, the reasonable person of classical contract
was purely an instrumental device. The reasonable person is placed
within the conceptual framework of liberal theory. This reasonable
person is static in nature seeing freedom of contract as a linear pro-
gression, rationally based. Such linear rationality is premised upon
the autonomous, unencumbered self. An expanded version of the
contractual self is premised upon the belief in the inherent sociality of
a more fully-constituted self. It is premised upon "what Margaret
20 9
Jane Radin describes as the role of the self within groups.
The importance of the self within groups (transaction-type, situa-
tion-type, merchant rules) is a central tenet of Llewellyn's contextual-
ism. The problem with the classical reasonable person is that her
rationality is narrowly confined to her words and actions at the time of
contract formation. The contractual self recognizes that the self is a
product of many contractual selves that project both historically and
into the future.
Llewellyn's contractual self is a contextual phenomenon in a num-
ber of ways. It operates within the context of the specific transaction
and within group-determined embedded structures. The group's no-
tions of fair dealing and good faith are examples of such embedded
structures. The temporally narrow reasonable person of abstract con-
ceptualism is replaced with a continuous, broad-based social-contex-
tual self. This brand of the reasonable person is a natural appendage
to the decentralization of contract interpretation mandated by the
Code. Under the Code, each contractual self is unique and reflects
the personhood of a specific human subject. Each contractual self is a
product of the unique experiences of past contractual selves and the
evolving relationship between the individual self and the group of sim-
2 10
ilarly situated selves.
VI. CONCLUSION
The Llewellynian model of theory building rests on a simple belief

that social reality possesses an internal coherence that implies the
ability to construct an internal legal coherence through the flow of
209. Id. at 270, quoting Margaret Jane Radin, Property and Personhood,34 STAN. L. REV. 957,
965 (1982). See also Meir Dan-Cohen, Responsibility and the Boundaries of the Self, 105 HARV.
L. REV. 959 (1992) (notion of the contingent self). "The view of the self as a fixed entity defined
prior to and independent of social relationships has come under increasing attack .... The contin-
gent self.., permits us to articulate an alternative to the free will paradigm of responsibility."
Id. at 961.
210. This view embraces the work in social norms and behavioral decision theory.
social context into legal rules. In the end, Llewellyn's attempt to

bridge the conceptual-contextual divide through a dual track theory of
interpretation positions him between abstract conceptualism and the
indeterminacy of critical legal theory. His theory of interpretation
grounded contract rules and their application in a contextualism con-
nected to an evolving social dynamic. This grounding avoids the
freezing of the law's conceptual apparatus that characterized the for-
malism of classical legal reasoning. His use of "singing rules" and
meta-principles was an admission that law (rules) could be made to be
functionally determinate.
Llewellyn's theory of interpretation was premised on the belief that
rule application could be made functional when formal rules and doc-
trines were tempered by the reasons and purposes that underlie them.
The goal of Llewellyn's singing rule was to make these reasons and
purposes accessible to the person applying the rule. In the case where
the reasons are not apparent, where there is a gap in the rules, or
where there is rule conflict, recourse is to be made to meta-principles.
It is these meta-principles that allow for the use of Dworkinian theory
building in interpreting the "best" contract law possible. The applica-
tion of such meta-principles as good faith, fair dealing, commercial
reasonableness, and unconscionability allows for the prescriptive
channeling of behavior that Llewellyn's realism was attacked as lack-
ing. In this way the right to contract, as reflected in the unencum-
bered reasonable person of liberal theory, is not allowed to
completely separate from the outcome or good of the contract, as re-
flected by a more fully constituted (social-contextual) contractual self.
Dialectical conceptualism as a theory of interpretation is founded
upon a broad view of contextualism and the contractual self. This ex-
panded interpretive inquiry aims to bridge the distances between con-
text-concept and subjectivity-objectivity.

A Theory of Interpretation in The Realm of Idealism

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DePaul Business and Commercial

A Theory of Interpretation in the Realm of Idealism

Follow this and additional works at: https://via.library.depaul.edu/bclj

Karl Llewellyn' is famous for numerous accomplishments, including

terpretation. 6 His enormous body of work provides a rich literature in

12. See infra Part II.C. (type-facts).

The conceptual side of the Liewellynian theory of interpretation

17. See infra Part II.E.

The phrase acknowledges that law is a conceptual system that at times

24. See infra Part II.C.

restate a version of idealism originally offered by one of America's

II. FIRST CITADEL OF IDEALISM: CLASSICAL CONTRACT THEORY

Classical contract theory refers to the brand of abstract conceptual-

34. See supra note 23 (description of "later Llewellyn").

The public-private distinction was a feature of the apparatus of ab-

1. Will Theory and the Purification of Contract Doctrine

Contract.52 The reception of Keener's analysis into the law opened

52. KEENER, TREATISE ON THE LAW OF QUASI-CONTRACTS (1893), as discussed in Kennedy,

were used to quash contract enforcement of obligations that failed to

2. Realist Critique of the Public-Private Distinction

B. The Objective-Subjective Dialectic

one. 71 He argued that the subjective meeting of the minds standard

1. Llewellyn's View of Objectivity

background discourse of commercial practice. Llewellyn's rejection of

C. The Fact-Law Distinction

D. Formality as Servant of Concept and Context

The evidentiary and cautionary functions are alluded to in a section

91. Id. at 746-747.

III. MAKING RULES WORK: LLEWELLYN

William Twining once stated that "one of [Llewellyn's] favorite

mulate a workable or functional conceptualism, that is, how to make

116. Id. at 134.

Throughout Llewellyn's writings on contract and jurisprudence one

121. LLEWELLYN PAPERS, supra note 100, at 21.

D. The Role of Rules in the Legal Order

As discussed earlier, Llewellyn possessed a moderate form of rule

E. Llewellyn's Singing Rule

mission of contextual evidence in which the type-facts of the case can

IV. DWORKIN-LLEWELLYN THEORY BUILDING

determinate answers to novel or hard cases. For Llewellyn, rules re-

Llewellyn's realism dictated that when stating or restating the law

B. Dworkinian Theory Building and the Law of Contracts

ple. 148 In the case of ambiguity, whether it be a rule or standard appli-

148. See RONALD DWORKIN, A MATTER OF PRINCIPLE (1985). "[Aldjudication is characteristi-

descriptive undertaking. 152 It is also an interpretive undertaking that

L. REV.359. (1975). Professor Greenawalt describes Dworkin's concept of coherence as a judge

interpretation founded upon Llewellyn's contextualism and

A. Rule Fit and Resolving Rule Non-Fit

context elicits possible application of more than one rule. This is an

1. Abstract Conceptualism Versus Dialectical Conceptualism

2. Llewellyn's Free Flow of Context

160. Kennedy, Distributive and PaternalistMotives, supra note 26, at 582.

part of an ongoing development of commercial practice. As such, the

3. The Danger of Judicial Arbitrariness

B. Dual Track Theory of Interpretation

1. The Second Track: Applying "Big P"

167. Fuller, Considerationand Form, supra note 59.

achieved. The rule application is justifiable from the perspective of