Value Investing

Warren Buffett’s contracting philosophy and practices

In a centuries-old debate among contracts scholars, one group supports a presumption favoring a text-centered approach to the interpretation of a written agreement — the plain meaning taken from the four corners — while opponents urge a broader understanding of context — what the parties intended and the circumstances of their negotiation. The contending positions have so hardened that, in a jarring juxtaposition my new Essay will reveal, recent academic classifications of the same state laws are exactly opposite to each other: contextualists classify certain states as contextualist that textualists say are textualist!

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Warren Buffett

Yet despite the persistence of acute polarization, the author also documents — and applauds — promising trends in the literature toward hybridization and compromise, a search for factors to guide the selection of interpretive tools rather than putting some off limits or setting up default rule presumptions. While scholars have thus long obscured a common-sense reality, a new wave of research is making it clearer to all sides that text and context are both useful, depending on the details of different jobs.

More modern, advanced, and sensible, this new view of contract interpretation replaces a stubborn “winner-take-all” approach to the debate with a flexible and practical “best-tool-for-the-job” approach. To illuminate its importance and value — call it contract interpretation 2.0 — my new Essay turns to Warren Buffett’s contracting philosophy and practices. The famous investor and businessman is also a polyglot teacher, and his approach to contracts, especially acquisition agreements and employment arrangements, illustrates the imperative of using the right tool for the job.

Article by Lawrence Cunningham, Concurring Opinions

 

See

Cunningham, Lawrence A., Contract Interpretation 2.0: Not Winner-Take-All But Best-Tool-For-The-Job (2018). 85 Geo. Wash. L. Rev. 1625 (2018); GWU Law School Public Law Research Paper No. 2018-09; GWU Legal Studies Research Paper No. 2018-09. Available at SSRN: https://ssrn.com/abstract=3140079

More modern, advanced, and sensible, this new view of contract interpretation replaces a stubborn “winner-take-all” approach to the debate with a flexible and practical “best-tool-for-the-job” approach. To illuminate its importance and value — call it contract interpretation 2.0 — this Essay turns to Warren Buffett’s contracting philosophy and practices. The famous investor and businessman is also a polyglot teacher, and his approach to contracts, especially acquisition agreements and employment arrangements, illustrates the imperative of using the right tool for the job.