Steven W. Feldman, Laws as Implied Contract Terms: The Divergent Approaches and a Proposed Solution (February 24, 2017). University of Pennsylvania, Journal of Business Law, Vol. 19 Issue No. 4, Forthcoming. Available at SSRN
The great majority of state and federal courts accept the common law rule that courts in construing contracts may incorporate relevant, unmentioned laws as implied contract terms. Dating back to the early nineteenth century, this principle of contract construction is said to be a basic legal concept of longstanding and accepted use.
Despite the doctrine’s pervasive theoretical and practical importance as a silent factor in every contract, courts have failed to articulate a consistent, convincing policy and doctrinal rationale. Most courts also have overlooked numerous doctrinal deficiencies, gaps, and contradictions and they have not acknowledged the decisions restricting or even rejecting the precept. Similarly, no commentator has provided an in-depth treatment even though there are nearly 1200 decisions on this topic.
This Article is the first effort in the literature to undertake a comprehensive descriptive and normative analysis of what will be called the “implied incorporation doctrine.” Replete with presumptions and legal fictions, the principle is an uneasy merger of the rules of statutory and contract construction. This problematic melding of statutory and contractual principles is the main reason for the divergent approaches and doctrinal contradictions. After canvassing the key issues surrounding the principle, I will propose a uniform formulation that better maintains the legal and logical differences between laws and contract.