Contract Theories

The lawyer’s vision of the contract tends to focus on the legal implications of the contractual breakdown, on the rights, obligations and consequences of litigation, but the lawyer’s concerns are in no way at the forefront of the entrepreneur’s mind. For someone in the business, the contract is primarily a facilitation device within an economic cycle, which activates processes such as the acquisition of materials, the production of finished products, marketing and sales, finance and payment. Entrepreneurs and economists often worry about the cost of hiring. For example, standard form contracts are less expensive to produce than ‘made-to-measure’ documents. It often happens that, for them, insisting on precise contract performance is costly in terms of money and business relationships. It is clear that the lawyer, who only knows the law of the contract, and little or nothing of the rest of the contract, has only a small and incomplete vision of the commercial sector.

A set of perspectives to see the contracts are those provided by disciplines other than the law. It is naive to think that contracts only interest attorneys and law professionals. Contractual relationships are also relevant for sociologists, anthropologists and economists interested in what nurtures cooperation among individuals in society, norms that arise from voluntarily imposed agreements that become contracts and how contracting parties can receive incentives to maximize their own benefit and that of the broader economy. Seen in this way, the contract is not an end in itself but a tool of social order. It is also an intensely political issue. Contractual law treatments that present the subject as a series of neutral rules and doctrines often do not emphasize this point. The contractual doctrines reflect particular ideologies on how and if contractual relationships should be governed, and are often harshly challenged by those on the left and right of the political spectrum.

Author: Salvador Trinxet

In the United States

For information about Contract theories in the context of international trade, click here

Contract Theories and the Laws of International Trade

Contract and tort theories

Gray Market Goods

Resources

See Also

Further Reading

• Information about Contract Theories in the Encyclopedia of World Trade: from Ancient Times to the Present (Cynthia Clark Northrup)