The Butterfly Effect in Boilerplate Contract Interpretation

Abstract

Disputes relating to contract interpretation are frequently conceptualized as one-and-done affairs. The court will adopt what it considers to be a reasonable interpretation of the contract, rule in favor of one of the parties, and decide the case. Neither the judge nor the litigants tend to think overmuch about how the decision will affect other contract users going forward. In cases where the language being interpreted is contract boilerplate, however, past interpretive decisions will inevitably affect future ones. Just as a butterfly flapping its wings in Tokyo can change the weather in London, so too can a judicial decision interpreting boilerplate language alter the meaning of identical language in thousands of other contracts. To speak of the “butterfly effect” in boilerplate contract interpretation, therefore, is to describe the effect that a single interpretive decision can have on the interests of far-flung parties not involved in the litigation at hand. This short essay has two objectives. First, it provides a general introduction to the butterfly effect and explains, at the level of concept, why it is useful to think about boilerplate contract interpretation through this particular lens. Second, it provides summaries of eight articles to be published in a special issue of Law and Contemporary Problems devoted to exploring the butterfly effect in boilerplate contract interpretation. These contributions, it is hoped, will prove useful to future scholars and judges grappling with the interpretive challenges posed by ambiguous contract boilerplate.