Arcos v Ronaasen as a Relational Contract

Abstract

I have long been of the opinion that the main reason that the relational theory of contract set out by the late Ian Macneil has encountered such resistance from mainstream understandings of the law is that it has been interpreted as a very paternalistic theory opposed to freedom of contract, one which has no or very little place for competition. I have argued at great length elsewhere that this certainly was not Macneil’s intention (Campbell, 2001), and, drawing on his work, that the relational theory can readily be restated in such a way as to give competition a central place in, say, the doctrines of agreement (Campbell, 2003) and remedy (Campbell, 2005). Contracts can usefully be placed along a spectrum ranging from the simplest to the most complex, and, as I have myself argued (Campbell and Harris, 1993; Campbell, 2013), it is true that the latter more clearly evidence the self-consciously co-operative action by the parties that Stewart Macaulay called ‘non-contractual relations’ and Macneil, in the earlier stages of his work, called relational contracting. Nevertheless, the correct view of the relational theory is, I believe, not that there is a class of relational contracts which should be distinguished from discrete contracts, but that all contracts, including the simplest (Campbell, 1996), are relational. The reason the relational theory is so superior to the classical law of contract (and its corollary neoclassical economic understanding of exchange) is that all contracts can be fully understood only when their relational dimension is made explicit (Campbell, 1997). In this chapter, I hope to provide evidence for this claim by examining what I think it will be allowed is, on the face of it, a if not the case which is most unpromising for this purpose: Arcos Ltd v EA Ronaasen and Son.²

I am grateful to Warren Swain, to those attending the Macneil conference and the members of the North East Regional Obligations Group for comments on this chapter.