Ask the Expert: The Emergence Of Relational Contracts - What They are and Why They are Important?

Published: 22 Nov 2019 Average Rating: 4.6 / 5 Print

Author: Paul Goulding

The term 'relational contract' has been around for a while and was included in a UK case decided 6 years ago. Since then the phrase has been used several more times in judgments but typically where the cases in question involved some fairly extreme behaviour by one of the contracting parties and often where the written contract in question was fairly brief and rudimentary, between smaller enterprises and entered into without the benefit of much by way of professional legal advice. A case in 2018 seemed to change all that when the term was applied to a contract running to many hundreds of pages entered into between two very substantial organisations with the benefit of very extensive legal advice. We waited to see whether that was something of a 'one-off'. Now we have the answer with a judge confirming that 'the concept of relational contracts is an established one in English law'.

Why is this important? It is incredibly important because the classification of a contract as a relational contract would seem to materially impact how the contract is likely to be interpreted; make it more likely that terms will be implied (including implied duties of good faith - something which the English Courts have traditionally frowned upon) and impact how contracting parties can exercise any contractual discretion.

It is therefore vital to understand the characteristics of a relational contract so as to be able to identify them, advise accordingly and investigate what, if anything, can be done to avoid the possible adverse consequences of and potential uncertainty created by a relational contract. English contract law has always been praised for its stability and certainty but query whether this is a development in the wrong direction?


This content is only available to members.

Register Now   Sign In

Related Discussions

Please sign in or register to post on this forum

Marshall Denning
2019-06-12 10:55:59

8 payment schemes

Jacko mentions there are 8 different payment schemes - do we know which?
Replies: 1

Supply Advantage
2014-08-25 23:44:58

Examples of Collaborative Freight Agreements

I am currently going through the RFP process for National freight (Australia) as well as International freight (SE-Asia) I am reading some great literature on "...
Replies: 1
2019-07-28 06:49:22


For Agreement between the Parties of differnet origin , the aurgument starts up on Jurisdiction and governing law for the AGreement. while both the Parties are interes...
Replies: 3

Novo Nordisk
2019-03-29 09:26:07

Graphics changes in negotiated templates

Have you tried using simplification techniques (text and visuals) in templates that may be changed during negotiation? I successfully launched a simplified confidenti...
Replies: 3

Occidental Petroleum Corporation
2019-02-12 17:17:02

Cloud Contracting

I am interested in perspectives on various issues and contracting approaches for the use of cloud services, particularly from niche providers who may, in-turn, actuall...
Replies: 2
2019-02-12 17:03:56

Limitation of Liability

I was recently having coffee with four other individuals involved in contracting for IT Professional Services. During the course of conversation one of the participan...
Replies: 3

Rider Levett & Bucknall
2019-02-01 22:12:02

Visual contracts to support collaborative contracting

During the IACCM Australasia Conference in Sydney Australia back in 2016, I was introduced to a new mindset in commercial contracts, namely, 'collaborative contra...
Older entries »
Replies: 4