Telling Tales about Relational Contracts: How Do Judges Learn about the Lived World of Contracts?

Abstract

The lack of fit between relational and judicial ways of thinking about commercial relationships continues to be highly problematic to those of us who teach and study contract law. The claim made by relationalists that the neoclassical model of contract fails to adequately reflect commercial practice is suggestive of a legitimation crisis in which the jurisprudence of contract fails to recognize the needs of the community it has long sought to serve. The urgency of the problem has been made clear by a wealth of empirical studies of the lived world of contract which demonstrate that commercial actors are reluctant to bring their disputes before the courts. Significantly, this is not just as a result of the expense and delay involved but because business people perceive the law to be out of step with best business practice, injurious to commercial objectives and an inadequate mechanism for protecting their long-term financial interests (see, for instance, Beale and Dugdale, 1975; Lewis, 1982; Lyons and Mehta, 1997; Narayandas and Rangan, 2004). In endeavouring to provide access to justice and the vindication of contractual rights, it has been argued that the legal process may become an instrument for unravelling the ties of trust and confidence in commercial relations, and for preventing an accommodation which preserves the benefits expected from the transaction for both parties (Collins, 1999). What socio-legal and relational accounts of contracts have exposed is that when we teach our students through legal precedent we provide them with a skewed understanding of the role that law does, and more importantly could, play in the architecture of commercial relationships.