False consensus bias in contract interpretation

Columbia Law Review

Volumn 108, Issue 5, 2008, Pages 1268-1299

  Solan, Lawrence ^a,b,c   Rosenblatt, Terri ^a   Osherson, Daniel ^a,d  

^a Department of Law ^*

^b Center for the Study of Law Language and Cognition

^c BROOKLYN LAW SCHOOL   (United States)

^d PRINCETON UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 46749127830     PISSN: 00101958     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (160)

1. See Joachim Krueger & Russell W. Clement, The Truly False Consensus Effect: An Ineradicable and Egocentric Bias in Social Perception, 67 J. Personality & Soc. Psychol. 596, 596-97 (1994) (explaining generally effect of personal attributes and endorsements on consensus estimates);
2. see also infra notes 67-73 and accompanying text.
3. See, e.g., E. Allen Farnsworth, Contracts § 7.3, at 426 (4th ed. 2004) ("[S]ince the [parol evidence] rule excludes evidence only if it contradicts the writing ...[,] the rule does not exclude evidence offered to help interpret the language of the writing.").
4. The division is between courts that use a "hard" parol evidence rule that permits courts to limit their investigation to the language of the contract itself, and those that use a "soft" parol evidence rule that permits some preliminary inquiry into whether a contract that looks clear at first glance remains so after some investigation. See generally Eric A. Posner, The Parol Evidence Rule, the Plain Meaning Rule, and the Principles of Contractual Interpretation, 146 U. Pa. L. Rev. 533 (1998) (describing and analyzing "hard" and "soft" parol evidence rule approaches).
5. Restatement (Second) of Contracts § 213(1) (1981) ("A binding integrated agreement discharges prior agreements to the extent that it is inconsistent with them.").
6. U.C.C. § 2-202 (2004) (stating that writings intended as final expressions "may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement").
7. Courts continue to articulate the parol evidence rule in such terms. For recent examples, see, e.g., Clanton v. Inter.Net Global, L.L.C., 435 F.3d 1319, 1326 (11th Cir. 2006)
8. ("Under New York law, 'the parol evidence rule requires the exclusion of evidence of conversations, negotiations and agreements made prior to or contemporaneous with the execution of a written contract which may tend to vary or contradict its terms.'" (footnote omitted) (quoting U.S. Fire Ins. Co. v. Gen. Reinsurance Corp., 949 F.2d 569, 571 (2d Cir. 1991)));
9. Staubach Retail Servs.-Se., LLC v. H.G. Hill Realty Co., 160 S.W.3d 521, 525 (Tenn. 2005)
10. ("The parol evidence rule does not permit contracting parties to 'use extraneous evidence to alter, vary, or qualify the plain meaning of an unambiguous written contract.'" (citation omitted) (quoting GRW Enters., Inc. v. Davis, 797 S.W.2d 606, 610 (Tenn. Ct App. 1990))).
11. The principle is called contra proferentem. For recent discussion of the rule and why it has not been effective at eliminating ambiguous language from insurance contracts, see Michelle E. Boardman, Contra Proferentem: The Allure of Ambiguous Boilerplate, 104 Mich. L. Rev. 1105, 1121-25 (2006).
12. Restatement (Second) of Contracts § 201(2).
13. See id. § 201 (1) ("Where the parties have attached the same meaning to a promise or agreement or a term thereof, it is interpreted in accordance with that meaning.").
14. See, e.g., Perry v. Wolaver, 506 F.3d 48, 53 (1st Cir. 2007)
15. ("Contracts should be interpreted to give effect to the parties' intentions expressed by the writing, considering the subject matter, purpose, and object of the contract");
16. French v. Assurance Co. of Am., 448 F.3d 693, 700 (4th Cir. 2006)
17. ("'The principal rule in the interpretation of contracts is to effect the intentions of the parties.'" (quoting Nationwide Ins. Co. v. Rhodes, 732 A.2d 388, 390-91 (Md. Ct. Spec. App. 1999)));
18. Canal Ins. Co. v. Underwriters at Lloyd's London, 435 F.3d 431, 435 (3d Cir. 2006) ("The goal of interpreting an insurance policy, like the goal of interpreting any other contract, is to determine the intent of the parties as manifested by the language of the policy.").
19. Sault Ste. Marie Tribe of Chippewa Indians v. Granholm, 475 F.3d 805, 811 (6th Cir. 2007)
20. (quoting McIntosh v. Groomes, 198 N.W. 954, 955 (Mich. 1924)).
21. See, e.g., Wash. Metro. Area Transit Auth. v. Potomac Inv. Props., Inc., 476 F.3d 231, 235 (4th Cir. 2007) (holding that summary judgment is appropriate when "contract in question is unambiguous or when an ambiguity can be definitively resolved by reference to extrinsic evidence.").
22. Typical is one court's statement in In re Linerboard Antitrust Litigation, 443 F. Supp. 2d 703, 713 (E.D. Pa. 2006)
23. ("[T]he primary goal of contract interpretation is to determine and enforce the intent of the parties. To do so, the Court must turn to the language of the contract .... 'When the parties express their intent in unambiguous words, those words are to be given their plain and ordinary meaning.'" (citations omitted) (quoting Motorsports Racing Plus, Inc. v. Arctic Cat Sales, Inc., 666 N.W.2d 320, 323 (Minn. 2003))).
24. Mincin v. Vail Holdings, Inc., 308 F.3d 1105, 1112 (10th Cir. 2002) (applying Colorado law);
25. see also Dasey v. Anderson, 304 F.3d 148, 158 (1st Cir. 2002) (applying Massachusetts law);
26. Golden Pac Bancorp v. F.D.I.C., 273 F.3d 509, 516 (2d Cir. 2001) (applying New York law);
27. Martin v. Monumental Life Ins. Co., 240 F.3d 223, 233 (3d Cir. 2001) (applying Pennsylvania law).
28. See Spalding & Son, Inc. v. United States, 24 Cl. Ct 112, 139-41 (Cl. Ct 1991) (interpreting "loss" in lumber contract to include destruction of trees due to forest fire, and stating "simple and straightforward" rule of contract construction that "[w]ords are to be given their plain and ordinary meanings" (internal quotation marks omitted));
29. see also Pac. Ins. Co. v. Am. Nat'l Fire Ins. Co., 148 F.3d 396, 405 (4th Cir. 1998)
30. (interpreting liability coverage in fire insurance plan under strict adherence to plain meaning rule of contract interpretation); Int'l Multifoods Corp. v. Commercial Union Ins. Co., 98 F. Supp. 2d 498, 503 (S.D.N.Y. 2000) (using "plain meaning rule" to interpret Wartime Exclusion in insurance contract to not apply to stolen goods during peacetime);
31. Meritxell, Ltd. v. Saliva Diagnostic Sys., Inc., No. 96 Civ. 2759, 1998 WL 40148, at *7 (S.D.N.Y. Feb. 2, 1998) (collecting cases explaining plain meaning rule).
32. Omega Eng'g, Inc. v. Omega, S.A., 432 F.3d 437, 446 (2d Cir. 2005)
33. (quoting United Illuminating Co. v. Wisvest-Conn., LLC, 791 A.2d 546, 550 (2002)).
34. (1864) 159 Eng. Rep. 375 (Exch.).
35. For recent discussion of this case in a judicial opinion, see, e.g., Rossetto v. Pabst Brewing Co., 217 F.3d 539, 543 (7th Cir. 2000) (describing existence of two ships as objective evidence of latent ambiguity in contract).
36. For discussion of the circumstances surrounding the case and the reason for some of the contractual language, see generally A.W. Brian Simpson, Contracts for Cotton to Arrive: The Case of the Two Ships Peerless, in Contracts Stories 29 (Douglas G. Baird ed., 2007).
37. Raffles, 159 Eng. Rep. at 375.
38. See Simpson, supra note 18, at 51.
39. Raffles, 159 Eng. Rep. at 376.
40. Restatement (Second) of Contracts § 201(3) (1981).
41. Earlier subsections deal with situations in which the parties were not in accord at the time the contract was formed, and one party was aware or had reason to be aware of the other's divergent understanding. In such cases, the unknowing party's meaning prevails. Id. § 201(2).
42. Bourke v. Dun & Bradstreet Corp., 159 F.3d 1032, 1036 (7th Cir. 1998)
43. (quoting Flora Bank & Trust v. Czyzewski, 583 N.E.2d 720, 725 (111. App. Ct 1991));
44. see also Evergreen Invs., LLC v. FCL Graphics, Inc., 334 F.3d 750, 755 (8th Cir. 2003)
45. (concluding letter agreement for purchase of property was not ambiguous, and parol evidence rule was not applicable when clear on face of letter that both parties agreed to transaction); Hunt Ltd. v. Lifschultz Fast Freight, Inc., 889 F.2d 1274, 1278-79 (2d Cir. 1989)
46. (holding contract for fee payments in freight transport agreement is not ambiguous merely because parties later disagree); REP MCR Realty, LLC v. Lynch, 363 F. Supp. 2d 984, 1019-20 (N.D. Ill. 2005) (holding that use of term "voluntary" in loan agreement was not ambiguous merely because guarantor and third party defendant attorney who advised him disagreed on its meaning).
47. Noam Chomsky, New Horizons in the Study of Language and Mind 30 (2000).
48. Willard Van Orman Quine, Word and Object 51-52 (1960).
49. This is not to say that Quine's example is of practical significance. Children learning words proceed with biases that prefer whole objects rather than an amalgam of parts of an object. And even if Quine is correct, there are no rabbits that are not both whole rabbits and also a set of undetached rabbit parts, making errors in interpretation rather small. For further discussion of Quine's example, see Gregory L. Murphy, The Big Book of Concepts 340-46 (2002).
50. Noam Chomsky, Aspects of the Theory of Syntax 21 (1965).
51. For discussion of the language issues in this case, see Sanford Schane, Language and the Law 20-22, 33-35, 50-51 (2006).
52. Lawrence M. Solan, Pernicious Ambiguity in Contracts and Statutes, 79 Chi.-Kent L. Rev. 859, 859 (2004).
53. As acknowledged in that article, the expression "pernicious ambiguity" comes from John Darley. See id. at 859 n.1.
54. Eleanor Rosch, Cognitive Representations of Semantic Categories, 104 J. Experimental Psychol.: General 192, 197-99, 229 tblA1 (1975).
55. For an overview of the role of prototypes and categories, see generally James A. Hampton, Psychological Representation of Concepts, in Cognitive Models of Memory 81 (Martin A. Conway ed., 1997).
56. See Hampton, supra note 29, at 94-98 (providing overview of exemplar approach to concept representation);
57. see also Jesse J. Prinz, Furnishing the Mind: Concepts and Their Perceptual Basis 139-64 (2002) (summarizing prototype theory).
58. See, e.g., Andrew C. Connolly et al., Why Stereotypes Don't Even Make Good Defaults, 103 Cognition 1, 2 (2007) (suggesting that categories have prototypes but are not themselves prototypes).
59. See Sharon Lee Armstrong, Lila R. Gleitman & Henry Gleitman, What Some Concepts Might Not Be, 13 Cognition 263, 267 (1983) (describing view of categories that considers "[m]embership in the class [as] categorical, for all who partake of the right properties are in virtue of that equally birds; and all who do not, are not").
60. Daniel Osherson & Edward E. Smith, On the Adequacy of Prototype Theory as a Theory of Concepts, 9 Cognition 35, 44 (1981),
61. reprinted in Concepts: Core Readings 261, 268 (Eric Margolis & Stephen Laurence eds., 1999);
62. see also Jerry A. Fodor, Concepts: A Potboiler, 50 Cognition 95, 108-09 (1994) (describing how object may not assume prototypicality of constituent parts).
63. See generally Murphy, supra note 25, for an excellent presentation of many of the ideas and analyses.
64. See, e.g., Philip N. Johnson-Laird, The Mental Representation of the Meaning of Words, 25 Cognition 189, 206 (1987) (suggesting that our understanding of meaning contains both truth values and default values);
65. Steven A. Sloman, The Empirical Case for Two Systems of Reasoning, 119 Psychol. Bull. 3, 8-10 (1996) (arguing that mind relies on both rule-based and associative systems of categorization);
66. Edward E. Smith, Andrea L. Patalano & John Jonides, Alternative Strategies of Categorization, 65 Cognition 167, 192 (1998) (promoting existence of two distinct procedures for categorization: one rule-based, and one based on exemplar similarity);
67. Edward E. Smith & Steven A. Sloman, Similarity-Versus Rule-Based Categorization, 22 Memory & Cognition 377, 385 (1994) (arguing that categorization is done in two ways: by similarity and by rule).
68. Tim Schroeder, A Recipe for Concept Similarity, 22 Mind & Language 68, 69 (2007).
69. James A. Hampton, Zachary Estes & Sabrina Simmons, Metamorphosis: Essence, Appearance, and Behavior in the Categorization of Natural Kinds, 35 Memory & Cognition 1785, 1787-98 (2007).
70. Lance J. Rips, Similarity, Typicality, and Categorization, in Similarity and Analogical Reasoning 21, 38-43 (Stella Vosniadou & Andrew Ortony eds., 1989) (describing experiments in which subjects classified animals that had undergone change in outward appearance).
71. Hampton et al., supra note 37, app. at 1800.
72. Id.
73. Id. at 1788, app. at 1800.
74. Id. at 1789-90 & tbl.1.
75. Linda Coleman & Paul Kay, Prototype Semantics: The English Word Lie, 57 Language 26 (1981).
76. Id. at 28.
77. Id. at 30.
78. Id. at 32-33.
79. Id. at 31.
80. Id. at 30 & fig. 1.
81. Id. at 33 tbl.2.
82. Id. at 31-32.
83. Id. at 33 tbl.2.
84. Lawrence Solan and Peter Tiersma discuss such examples in the context of the Clinton impeachment. See Lawrence M. Solan & Peter M. Tiersma, Speaking of Crime: The Language of Criminal Justice 231-33 (2005) (arguing that different conceptions of lying may explain why people sincerely disagreed over whether Clinton lied about his sexual relations).
85. Coleman & Kay, supra note 43, at 31.
86. Id. at 33 tbl.2.
87. See id. at 39 tbl.5.
88. See id.
89. David Harsanyi, False American Idols, FrontPage Magazine, Oct. 21, 2002, at http://www.frontpagemag.com/Articles/Read.aspx?GUID=FB13CB3C-8C10-4312-99CE- EE8AF05A0BB0 (on file with the Columbia Law Review) (recounting Kael's reaction to Nixon's landslide presidential victory over George McGovern in 1972 when she supposedly said, "How can that be? No one I know voted for Nixon.").
90. See Daniel Katz & Floyd Henry Allport, Students' Attitudes: A Report of the Syracuse University Reaction Study 227-29 (1931).
91. Id. at 210 tbl.LVIII.
92. Id. at 227 tbl.LXIV.
93. Katz and Allport aptly recognized this limitation in their study and attempted to minimize the level of misreporting through various measures, such as using anonymous reporting, requiring check rather than handwritten responses, and providing assurances that there would be no disciplinary consequences to participants. See id. at 208-09.
94. If, for example, 40% of participants say they cheat and estimate that 75% of others cheat, the result appears to be false consensus bias. But if, because of underreporting, 75% actually cheat, then there is accurate estimation rather than false consensus bias at work.
95. Lee Ross, David Greene & Pamela House, The "False Consensus Effect": An Egocentric Bias in Social Perception and Attribution Processes, 13 J. Experimental Soc. Psychol. 279, 285-88 & tbl.3 (1977).
96. Id. at 286.
97. Id.
98. Ross, Greene, and House reported that "subjects who placed themselves in a given descriptive category consistently estimated the percentage of 'college students in general' in that category to be greater than did subjects who placed themselves in the alternative category." Id. (emphasis added).
99. Id. at 287 tbl.3.
100. Krueger & Clement, supra note 1, at 598-99.
101. Id. at 600 tbl.1.
102. Id. at 598.
103. Id. at 599.
104. Id. at 598-601.
105. Id. at 599, 601.
106. See id. at 596-97.
107. See, e.g., Thomas Gilovich, Differential Construal and the False Consensus Effect, 59 J. Personality & Soc. Psychol. 623, 632-33 (1990)
108. (arguing that false consensus bias is most prevalent when there is opportunity to construe single situation in different ways with no information that others may construe situation differently); James A. Kitts, Egocentric Bias or Information Management? Selective Disclosure and the Social Roots of Norm Misperception, 66 Soc. Psychol. Q. 222, 234 (2003) (arguing that false consensus bias results from bias in samples of information exchanged rather than from intrinsic cognitive bias).
109. See, e.g., Wood v. Foremost Ins. Co., 477 F.3d 1027, 1028 (8th Cir. 2007) ("When interpreting an insurance policy, Missouri courts follow the principle of contra proferentem, and construe any ambiguity against the insurer.").
110. Compare Ad. Ave. Assocs, v. Cent. Solutions, Inc., 24 P.3d 188, 192 (Kan. Ct. App. 2001)
111. (finding pollution exclusion to be unambiguous and to cover damages caused from leak of cement cleaner), and Quadrant Corp. v. Am. States Ins. Co., 76 P.3d 773, 775-76 (Wash. Ct. App. 2003)
112. (finding pollution exclusion applied to personal injuries of building occupant caused by release of fumes during insured roofing contractor's application of waterproofing sealant), with State Farm Fire & Cas. Co. v. M.L.T. Constr. Co., 849 So. 2d 762, 770-71 (La. Ct. App. 2003)
113. (finding mold damage not covered by pollution exclusion as exclusion limited to traditional polluters), and Belt Painting Corp. v. TIG Ins. Co., 795 N.E.2d 15, 18-21 (N.Y. 2003) (finding pollution exclusion ambiguous and inapplicable to paint fumes inhaled by contractor).
114. Firemen's Ins. Co. of Wash., D.C. v. Kline Sc Son Cement Repair, 474 F. Supp. 2d 779, 790 (E.D. Va. 2007).
115. Tower Ins. Co. of N.Y. v. Breyter, 830 N.Y.S.2d 122, 123 (App. Div. 2007)
116. (quoting Belt Painting, 795 N.E.2d at 20).
117. 975 F.2d 1215, 1216-18 (6th Cir. 1992).
118. Id. at 1219-20.
119. Equitable Life Ins. Co. of Iowa v. Gerwick, 197 N.E. 923, 925 (Ohio Ct. App. 1934).
120. Park-Ohio, 975 F.2d at 1220 (emphasis omitted).
121. No. 06-1245-WEB, 2007 WL 1520905, at *6 (D. Kan. May 22, 2007).
122. Id. at *6-*7.
123. Id. at *1-*2.
124. Id.
125. Id. at *2.
126. Id. at *5.
127. See id. at *6 (discussing cases).
128. 687 N.E.2d 72, 79 (Ill. 1997).
129. See supra notes 15-16 and accompanying text for discussion of courts' uses of the "ordinary meaning" approach.
130. Judd Ranch, 2007 WL 1520905, at *6-*7.
131. Compare Wyatt v. Nw. Mut. Ins. Co. of Seattle, 304 F. Supp. 781, 783-84 (D. Minn. 1969)
132. (finding that earth movement exclusion did not apply to damage caused by third party's excavation of contiguous property adjacent to plaintiff's home), with Loretto-Utica Props. Corp. v. Douglas Co., 642 N.Y.S.2d 117, 118 (App. Div. 1996) (holding that earth movement exclusion applied to prevent insured from recovering for damage to building caused by frost heave).
133. Compare Garamendi v. Golden Eagle Ins. Co., 25 Cal. Rptr. 3d 642, 647-48 (Ct. App. 2005)
134. (finding pollution exclusion clause applied to preclude silica dust inhalation claim against insurer), with Andrew Robinson Int'l, Inc. v. Hartford Fire Ins. Co., No. 030353, 2006 WL 1537382, at *10-*11
135. (Mass. Super. Ct. Feb. 6, 2006) (finding injury from sandblasting caused by neighbor's negligence not within pollution exclusion).
136. See supra note 93 and accompanying text for cases interpreting earth movement exclusion clauses.
137. For purposes of the study, we simplified the process by which silicosis develops.
138. The results from this question suggest that many participants simply were not able to translate their answers to the earlier questions into dollar amounts in any principled way - a finding consistent with empirical work on jury assessment of punitive damages. See Cass R. Sunstein et al., Punitive Damages: How Juries Decide 212 (2002) ("The present empirical studies . . . show that the major locus of unreliability and disorder in punitive damages decisions is in jurors' assessments of an appropriate dollar award . . . ."). We do not discuss this question further, in that it falls outside the scope of this Essay.
139. We have made the donation, both on their behalf and on behalf of those who participated in a pilot study.
140. The Wilcoxon test is a statistical procedure used to compare the means of two populations that are not in a normal distribution. This study's result is statistically significant. Typically, psychological studies demand only that p < .05 to reach significance. Our study was significant at the level of p < .001. The null hypothesis tested by the Wilcoxon test was that the mean error is zero. The likelihood of that hypothesis being valid given the distribution of data is less than one in one thousand, according to the test.
141. Reducing the number of experimental conditions permits stronger statistical inferences when the number of subjects is limited. Since there was no statistical difference between the "exclusion" and "insurance" versions in Study 1, we decided to use only the "exclusion" version in Study 2. That is the version that actually appears in the insurance policies that are the subject of litigation.
142. For examples in the context of asbestos litigation, see Jeffrey W. Stempel, Assessing the Coverage Carnage: Asbestos Liability and Insurance After Three Decades of Dispute, 12 Conn. Ins. L.J. 349, 393-406 (2006).
143. Lawrence M. Solan, The Written Contract as Safe Harbor for Dishonest Conduct, 77 Chi.-Kent L. Rev. 87, 103 (2001).
144. See supra text accompanying notes 36-42.
145. See, e.g., supra Table 1 (showing laypeople in 45% and 41.7% minority estimated consensus by, respectively, 60.5% and 63.4% of other laypeople) and supra Table 3 (40% and 40%, estimated respectively as 67.4% and 63.1%).
146. This is not to say that cognitive preference explains all differences among judges in interpreting legal texts. When more than one interpretation is possible, no doubt politics plays at least some role in determining which judges prefer which interpretation. See Thomas J. Miles & Cass R. Sunstein, Do Judges Make Regulatory Policy? An Empirical Investigation of Chevron, 73 U. Chi. L. Rev. 823, 826 (2006) (demonstrating that liberal judges defer more to liberal agency interpretations of statutes, and that conservative judges defer more to conservative agency interpretations). Nonetheless, judges operate within a range of legitimate interpretations, and they should recognize this fact in deciding whether contractual language is ambiguous.
147. For discussion of the advantages of repeat players in contractual relations, see Randy E. Barnett, The Sound of Silence: Default Rules and Contractual Consent, 78 Va. L. Rev. 821, 887-92 (1992).
148. See, e.g., Cont'l Cas. Co. v. Advance Terrazzo & Tile Co., 462 F.3d 1002, 1009 (8th Cir. 2006)
149. (finding absolute pollution exclusion as defined in policy precluded coverage); Firemen's Ins. Co. v. Kline & Son Cement Repair, Inc., 474 F. Supp. 2d 779, 796-97 (E.D. Va. 2007) (granting summary judgment in favor of insurer in pollution exclusion case based on broad definitions in policy).
150. See, e.g., Unified W. Grocers, Inc. v. Twin City Fire Ins. Co., 457 F.3d 1106, 1116 (9di Cir. 2006)
151. ("'[A] court that is faced with an argument for coverage based on assertedly ambiguous policy language must first attempt to determine whedier coverage is consistent with the insured's objectively reasonable expectations.'" (quoting Bank of the W. v. Superior Court, 833 P.2d 545, 552 (Cal. 1992))).
152. For discussion, see Kenneth S. Abraham, The Expectations Principle as a Regulative Ideal, 5 Conn. Ins. L.J. 59, 61-67 (1998)
153. (describing scope of reasonable expectations "doctrine," but arguing that reasonable expectations "principle" underlying doctrine informs much of insurance law) ; Kenneth S. Abraham, Judge-Made Law and Judge-Made Insurance: Honoring the Reasonable Expectations of the Insured, 67 Va. L. Rev. 1151, 1152-54 (1981)
154. (summarizing judicial development of reasonable expectations doctrine); see also W. David Slawson, Contractual Discretionary Power: A Law to Prevent Deceptive Contracting by Standard Form, 2006 Mich. St. L. Rev. 853, 877-80
155. (proposing reasonable expectations doctrine be replaced with stronger doctrine regulating exercise of discretionary drafting power); W. David Slawson, The New Meaning of Contract: The Transformation of Contracts Law by Standard Forms, 46 U. Pitt. L. Rev. 21, 23 (1984) (defining reasonable expectations of parties from whatever source as new meaning of contracts).
156. See Daniel Schwarcz, A Products Liability Theory for the Judicial Regulation of Insurance Policies, 48 Wm. & Mary L. Rev. 1389, 1435-59 (2007) (arguing that courts should apply products liability law in analyzing insurance policies for design defects or failures to warn consumers of pitfalls).
157. See Restatement (Second) of Contracts § 201 (1981).
158. See Russell Korobkin, Bounded Rationality, Standard Form Contracts, and Unconscionability, 70 U. Chi. L. Rev. 1203, 1279-83 (2003) (proposing that courts provide presumptive validity to salient contract terms in unconscionability determinations).
159. For recent discussion of this role in the context of corporate directors' and officers' liability insurance, see Tom Baker & Sean J. Griffith, Predicting Corporate Governance Risk: Evidence from the Directors' & Officers' Liability Insurance Market, 74 U. Chi. L. Rev. 487, 533-34 (2007).
160. For discussion of some of the interpretive issues in such cases, see Lawrence M. Solan, Law, Language, and Lenity, 40 Wm. & Mary L. Rev. 57, 62-75 (1998).