Relational Contract Theory and Management Contracts: A Paradigm for the Application of the Theory of the Norms

Lancaster University Law School Research Papers

125 Pages Posted: 16 Jun 2010 Last revised: 21 Mar 2012

See all articles by Michael D. Diathesopoulos

Michael D. Diathesopoulos

University of Cambridge - Faculty of Law; Tilburg Law and Economics Center (TILEC); Leicester Law School

Date Written: June 15, 2010


This paper examines management contracts as a paradigm for the application of relational contracts theory and especially of the theory of contractual and relational norms. This theory, deriving from Macauley's implications, but structured and analysed by I.R. MacNeil gives us a framework for the explanation and understanding of contractual obligations and business relations' rules and practice.

After presenting the key literature about the norms theory and especially defining the content of MacNeil's norms, we define management contracts as relations, characterised by a high relational element and we explain why, investigating all their features, which make them a suitable object for an application of norms theory.

Then, we select a list of the core obligations for the recipient, provider and both parties in such a relation and we analyse each obligation according to MacNeil's model of norms. Specifically, we test the application of specific relative norms to each obligation and we examine which norms appear in which obligation.

Finally, we concentrate our results and we result to our conclusions, based on a matrix showing the strength, breadth and depth of the application of each norm, while we also compare our results to those coming up from the application of a shorter comprehensive model of norms (Austen-Baker's model). The above analysis and tests provide us valuable results about the application, significance and practical value of the theory of the norms, about the significance of each norm for business relations and finally about the potential to present a more useful and comprehensive model of norms.

Keywords: Relational Contracts, MacNeil, Management Contracts, Norms, Contracts Law, Fiduciary Duties, Directors Duties, Law and Economics, Umbrella Contracts, Interorganisational Trust, Business Cooperation, Reciprocity, Contractual Solidarity, Comprehensive Norms, Contractual Norms, Outsourcing Contracts

JEL Classification: K12, K22, L14, L20, M13

Suggested Citation

Diathessopoulos, Michail D., Relational Contract Theory and Management Contracts: A Paradigm for the Application of the Theory of the Norms (June 15, 2010). Lancaster University Law School Research Papers. Available at SSRN: or

Michail D. Diathessopoulos (Contact Author)

University of Cambridge - Faculty of Law ( email )

10 West Road
Cambridge, CB3 9DZ
United Kingdom

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE

Leicester Law School ( email )

University Road
Leicester LE1 7RH, LE1 7RH
United Kingdom

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