In the right hand column are the effects that each meaning will cause, more
accurately is believed to cause, if the court chooses it as the correct legal
meaning. These effects are labelled Effects 1-n to correspond with Meanings
1-n so that Meaning 1 causes Effect 1, Meaning 2 causes Effect 2 and so on.
Step 2: Reasons
Introduction
The second step is the process of reasoning that legislators and courts use in
order to choose between the options. On the surface there are three main
sources of reasons - policy, precedent and rules. Legislatures use only policy.
Courts use all three sources. However, when legal reasoning is analysed more
deeply, it can be seen that the only proper sources of reasoning is policy;
consequently precedent and rules make sense as sources of reasons only if
they are conceived as derivatives of policy.
Policy
When it uses policy as a means of reasoning a legislature or court will look
down the list of effects, Effect 0-n for making statutes and Effect 1-n for
interpreting law, and choose the effect which it believes is the best one, that is,
constitutes the most desirable outcome. The most desirable outcome is the
one that possesses the highest net benefit.
In practice net benefit is difficult to measure but in principle it is derived on the
basis that each Effect in the range Effect 0-n contains a number of
components often stretching over time and space. Each component will
constitute either a cost or a benefit. To derive the net benefit of an Effect one
sums all the benefits of these components to obtain total benefit and then sums
all the costs of these components to obtain total costs. Total costs are then
subtracted from total benefits to determine net benefit. Conveniently, net
benefit is a single measure of the value of an Effect and of the law or meaning
that causes it.
To illustrate how net benefit is used, assume that a legislature determines
Effect 2 as the best because it yields the highest net benefit. In this case the
legislature will enact a statute that will bring about Effect 2. This statute is
designated in the table of options as Statute 2. Similarly, if a court interpreting
law determines Effect 1 as the best effect, it will choose the meaning that
brings this about. In our way of presenting the options, this meaning is labelled
Meaning 1 in the table of options. The court will declare Meaning 1 to be the
legally correct meaning of the ambiguous provision.
There is an overwhelming strong argument that policy is the most rational way
to reason when both making and interpreting law. This argument is simple.
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