Conflicts Between Contract Law and Relational Contracting

Conflicts Between Contract Law and Relational Contracting

2012

DOI: https://doi.org/10.60164/adaet6adv

Authors: Penny-Anne F Cullen, Richard J. Hickman

Citation:

Cullen, P., F., and Hickman, R., J. (2012). Conflicts Between Contract Law and Relational Contracting. Lean Construction Journal, 2012, pp 49–60.

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Abstract:

Hypothesis: Contracts undermine the efficiency gains that parties to major projects intend from their working relations. 

Purpose: The paper focuses on the potential conflict between the interpretation of contract law from its Common Law base and relational contracting.  In particular, the character of the English Common Law of contract is briefly analysed.  Comparisons are then made on several recent cases which embody the Common Law interpretation in informal relational style agreements. Conclusions are drawn onto how the relational concept can be safely embodied into contract. 

Research Design: The study reviews the theory of relational contracting with reference to fundamental Common Law doctrines, which are illustrated with legal precedents 

Findings: Enduring Common Law concepts of laissez-faire and freedom to contract represent a historical hangover. It is therefore important that the construction industry, as well as sectors that represent other multi-party contracting environments, focuses on how the contract might support, rather than impede contemporary contractual relations. 

Limitations: The combination of the authors’ previous industrial and academic experience has proposed this preliminary study. 

Implications: The proposals to empirically evaluate and extend the ambit of the study has a positive economic impact on the construction industry, together with others practitioners who are lawmakers, contract lawyers, as well as professionals in both the public and private sectors who are involved in contracting. 

Value for practitioners: a foundation for empirical studies that will support and provide an impetus for practitioners and lawyers who are committed to reap the efficiency gains that are available if relational contracting is embodied in legal as well as aspirational terms. 

Keywords: Relational contracts, trust, relationships, uncertainty, good faith, contract law, transactions. 

Paper type: Case Study