Indirect Reports in the Interpretation of Contracts and Statutes: A Gricean Theory of Coordination and Common Knowledge

Abstract

When is an indirect report of what a speaker meant correct? The question arises in the law. The Contract Law case of Spaulding v. Morse is a good example. Following their 1932 divorce, George Morse and Ruth Morse entered into a trust agreement in 1937 for the support of their minor son Richard. In that agreement, George promised to “pay to [Spaulding as] trustee in trust for his said minor son Richard the sum of twelve hundred dollars ($1200) per year, payable in equal monthly installments on the first day of each month until the entrance of Richard D. Morse into some college, university or higher institution of learning beyond the completion of the high school grades, and thereupon, instead of said payments, amounting to twelve hundred dollars ($ 1200) yearly, he shall and will then pay to the trustee payments in the sum of twenty-two hundred dollars ($ 2200) per year for a period of said higher education but not more than four years.” Richard graduated from high school on February 5, 1946 and, in the post-WWII continuation of the draft, was inducted into the army the following day. The question in the case is whether George, by the words of the trust agreement, meant that he would pay $1200 per year for Richard’s support while he was in the army. Is that a correct indirect report of what George meant?

The explanation I offer assumes Gricean analysis of speaker meaning, and it emphasizes the role of speaker meaning typically plays in solving coordination problems. A coordination problem is a situation “in which each person wants to participate in a group action but only if others also participate.” A classic example is a political protest: “each person might want to take part in an antigovernment protest but only if there are enough total protesters to make arrests and police repression unlikely.” Coordination problems arise in more mundane settings as well—in Spaulding v. Morse, for example. Ruth and George want to mutually agree on Richard’s support: Ruth wants to commit to an arrangement only if George does, and vice versa for George. In 1937, George and Ruth solved the problem through speaker meaning. By signing the trust agreement, George, with Ruth as his audience, meant that he obligated himself to a particular support agreement. When Ruth signed, she, with George as her audience, meant that she accepted the agreement. In general, parties often solve coordination problems through speaker meaning. If, for example, enough people can communicate their commitment to participate in the protest to enough people, the protest will take place.

The account assigns a central role to the fact that speaker meaning facilitates coordination by creating relevant common knowledge. Common knowledge is “the recursive belief state in which A knows X, B knows X, A knows that B knows X, B knows that A knows X, ad infinitum.” Common knowledge facilitates coordination: “Actors coordinate when they have evidence for common knowledge, and refrain from coordinating when they do not.”

I am very much indebted to Steven Wagner for comments on an earlier draft.