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Contracts In Close Personal Relationships

In the collective imagination, contracts are synonymous with cold rationality. They are perceived as a defensive instrument, a protective shield that each contracting party may raise whenever it is opportune to do so. Essentially, contracts are portrayed as a solemn, rigid and inflexible document under the threat of which a party will ultimately agree to respect his or her commitments.

This conception of contracts is rooted in the classical legal theory [8] that holds that a contract is a meeting of the minds with a view to creating legally binding effects [9]. In other words, a contract is equivalent to a set of legal and lawful promises, the non-performance for which the law provides a remedy in the courts. Conceptualized this way, a contract takes on its real meaning when it has been breached [10], whereupon it is removed from the vault (to which it was committed immediately after being signed) and sent to the lawyer, whose mission is to ensure that the rights of the party that he or she represents, as they crystallized upon the exchange of consents, will prevail.

Naturally, such a concept of contract is not appropriate for people in a close relationship who seek the benefit of a legal framework. How can spouses, or two sisters who share their daily lives, lock themselves into a rigid structure when their relationship must evolve as events occur and time goes by? How can they perceive themselves as adversaries and agree to a pact in which judicial sanction is the primary consideration? Clearly, the bonds of love, brotherhood, sisterhood, family or friendship between people involved in a close relationship cannot accommodate the climate of suspicion and mistrust that such a limited conception of concept assumes.

No definition of contracts can stem from a single paradigm, however rich in meaning it may be. We must not allow the coercive function of contracts, on which classical theory focuses, to divert our attention from their other functions, including functions that the contractual practices of socio-economic actors reveal. Empirical research performed over the last few decades is particularly interesting in this regard.

It would seem that socio-economic actors treat contracts not as instruments of sanction, but as instruments for communicating and for organizing and planning their relationships [11]. Far from languishing in the back of a drawer, contracts act as a referential platform, or relationship guide, to which the parties refer to orient their actions based on the expectations and aspirations that each of them has expressed. In short, contracting parties do not view their contract through the same lens that lawyers use. The coercive function is relegated to a secondary role. Several scholars have, in fact, recognized this reality. For example, Professor Marjorie Maguire Shultz writes:

Given their academic training, lawyers naturally emphasise dispute resolution and contract enforcement by courts. By contrast, the parties to a contract do not focus on enforcement but on the goals, plans, relationships, exchanges [12].

Similarly, Professor Ian R. Macneil states:

[Performance planning] is, after all, the way most participants view most contract planning - only lawyers and other trouble-oriented folk look to contracts primarily as a source of trouble and disputation, rather than as a way of getting things done [13].

Closer to home, Professor Jean-Guy Belley made the following comments about the culture of Quebec notaries:

[TRANSLATION] The notarial profession is not easily parted from its propensity to address contracts solely from the viewpoint of the legal system, instead of addressing them from the perspective of social actors who seek a method of ordering that is adapted to their transactions or relationships [14].

This "reality gap" between classical theory and contractual practice favoured the emergence of a new theory that is more consistent with observable facts. Developed by American professor Ian R. Macneil, this "relational contact theory" offers a conception of contracts that is better adapted to today's exchanges and better suited to the special dynamic of close relationships [15].

Macneil identifies two categories of contractual exchange. The first, the discrete transaction, is a one-time transactional exchange. In theory, a discrete transaction involves no significant relationship between the parties beyond the exchange of consents. A contract of sale is a good example of this type of exchange: it merely memorializes the transfer of ownership and payment of the price.

The second category consists of "relational" exchanges. This type of exchange is a project in which the parties intend to cooperate over the long-term. Relational exchanges are longer lasting than transactional exchanges. Examples include relationships between members of a partnership, working relationships between an employer and an employee, or relationships between franchisers and franchisees.

Macneil's view is that classical theory, and the arcane dogmas on which it is based, remain centered on transactional contracts and exclude or marginalize relational exchanges, and that a new conceptualization of contracts might be able to accommodate all the subtleties, and ultimately all different expressions, of contractual rationality. In sum, Macneil argues that there is no reasonable way to deal with relational contracts though the lens of popular ideas that are strongly influenced by classical theory.

Thus, unlike a transactional contract, through which the parties carry out a one-time, decontextualized exchange without considering their respective identities, a relational contract is a way to structure a relationship that people, who have subjectively chosen each other, intentionally maintain and pursue in order to carry out a collaborative project. Instead of being a way to compensate for a lack of trust by providing for a sanction in the event of non-performance, the contract is a way to establish, adjust and express the normative framework in which the relationship can articulate itself. Relational contracts are not destined mechanically to program the end of the exchange, but rather, to support the relationship by enabling the parties to preserve it into the future and harmonize it with norms that emerge from the surroundings.

In this kind of theoretical perspective, the contractual process is centered on entirely different values. Unlike classical contracts, which are based on individualism, domination and antagonism, relational contracts are based on interdependence, cooperation and solidarity. Professor Louise Rolland has commented on these values, which empirical studies have proven to exist:

The parties, sharing a common economic destiny and desiring to preserve their business ties, set aside the conflictual transaction mindset and agree to work together. Consequently, the dominant values of integrity and solidarity are incorporated into the joint enterprise [16].

Macneil explains that only way these values can fully be realized is if can evolve within a mutable framework. Unlike the classical model, which is characterized by immutability, relational contracts are part of a temporal continuum. Flexible in nature, they are called upon to evolve with the passage of time and the occurrence of events. The parties to a relational contract are not fettering themselves. Rather, they are equipping themselves with an open framework that they will eventually be called upon to renegotiate based on the way their respective expectations have evolved.

Professor Belley explains the scope of this reality as follows: [TRANSLATION] "[G]iven the requirements of contractual and social solidarity, it is futile, and perhaps even dangerous, to attempt to lock the ordering of the future into any kind of conceptual and logical framework that is fixed on a one-time basis [17]. Essentially, then, the flexibility of the contract is part of the bond of interdependence that encourages necessary adaptation to prevail over stubborn adherence to original agreements and plans [18].

Although relational theory was primarily conceived to account for business relationships, its general framework is just as well suited to close personal relationships between adults[19]. Although he does not dwell on the point, Professor Macneil himself recognizes that marriage is a type of relational exchange [20].

Indeed, it is in the interest of persons in close relationships - business and personal alike - to equip themselves with a platform on which to organize and plan their relationships. To preserve this relationship and the benefits that each hopes to derive from it, they must be motivated by the primary relational values of cooperation, integrity and solidarity. Since their relationship is likely to evolve, they will need constantly to adjust, adapt and renegotiate the framework for their dealings, based on the changes that any uncertain future has in store.

Thus, unlike the principles of classical theory, the theoretical framework that Macneil proposes is compatible with the reality of close relationships. Instead of conflicting with the fundamental values on which such relationships are based, it recognizes their normative value fully [21]. As contracting parties, people in intimate relationships cannot be approached like enemies trying to protect themselves from each other. They must be treated like true partners who are concerned about preserving the stability of their relationship.

Having considered the general theoretical framework, we now fall to consider the purposes of relational contracts in close personal relationships. As I hope to demonstrate, a close relationship marked by a dynamic of interdependence warrants a level of organization that goes well beyond the challenges around which contractual ordering has traditionally been limited.