Recapturing Relational Contract Theory

Abstract

Relational contract theory is central to our understanding of contract law. One of the principal innovations in contracts scholarship in the twentieth century, relational contract theory has developed diverse approaches in the literature of law, business, sociology, and other academic fields and in the courts. Robert Scott's observation in 2000 is even more true today: "We are all relationalists now."

The development and application of relational contract theory by scholars across the disciplines and its penetration into the law itself have been valuable. In the process of adoption and adaptation, however, something important has been lost. Relational contract at its core challenges mainstream law and is not easily accommodated to it. 

This article recaptures the critical potential of relational contract theory. It returns to the core propositions of the theory and demonstrates their power in enlightening current issues in contract law and scholarship. Relational contract undermines the structure of contract law and its status as an independent legal subject. It challenges basic tenets of the "New Private Law," which is a major theme in recent scholarship. It contests contract law's claim of determinacy and objectivity and focuses on the role of power and inequality in contracting and contract law.

Keywords: contracts, contract law, relational contract, contract theory