Gunther Teubner, Networks as Connected Contracts, edited by Hugh Collins, translated by Michelle Everson, Oxford: Hart Publishing, 2011, 301 pp, hb £50.00.

Published date01 May 2012
DOIhttp://doi.org/10.1111/j.1468-2230.2012.00910.x
Date01 May 2012
REVIEWS
Gunther Teubner,Networks as Connected Contracts, edited by Hugh Collins,
translated by Michelle Everson, Oxford: Hart Publishing, 2011, 301 pp, hb £50.00.
Two recently published collections of papers – one co-edited by Marc Amstutz
and Gunther Teubner (Networks: Legal Issues of Multilateral Contracts, Hart,
2009) the other by Fabrizio Cafaggi (Contractual Networks, Inter-Fir m Coope-
ration and Economic Growth, Edward Elgar, 2011) – are evidence of a growing
European interest in the regulation of contractual networks. However, much of
the inspiration for this interest can be traced to GuntherTeubner’s seminal work,
Networks as Connected Contracts, first published (in German) in 2004, but now
made available to an English-speaking readership. For this, we are indebted to
Michelle Everson who undertook the translation, to both the Modern Law Review
and the publishers who gave financial support to the project,and to Hugh Collins
who introduces the book with an invaluable 72 page essay. For anyone wanting
to get to grips with contractual networks, this impressive book is essential
reading.
Before we run with networks, we need to walk a little. Our first law school
steps, it will be recalled, were (and still are) influenced by the classical framing of
a contract as, and only as, a reciprocal exchange between two parties,A and B. By
and large, the classical law is not interested in the particular identities (or market
status) of A and B; they are just transactional ciphers. Nor is the classical law
interested in whether A or B has functionally related contracts with C, D, or E.
Indeed, on some readings, this is an understatement, the classical view being (in
Ian Macneil’s words) that, ‘A and B had better be the only parties; [because]
adding C, D, and other such r iffraff is bound to create complicated relations
outside the transaction’.While the modern law has developed a quite explicit and
intense interest in the former question (that is, in whether A and B are contract-
ing in the course of a business, as consumers,or in a private capacity), there is little
such interest in whether the contract between A and B is part of a connected set
(or network). However, once we start thinking about networks (like the prover-
bial hammer and nails), we see them everywhere.We see them in old competition
cases such as Clarke vEarl of Dunraven:The Satanita [1897] AC 59 (where there
were potentially some difficulties in constructing or inferring contractual rela-
tionships between the protagonists);in cases of consumer financing such as OFT
vLloydsTSB Bank plc [2007] UKHL 48 (in which the House of Lords held that
the protection given to credit card holders by section 75(1) of the Consumer
Credit Act 1974 extends to more complex modern credit networks as well as to
transactions made with overseas suppliers); and, in a myriad of commercial cases
– for example,in franchising, in international sales that are underwritten by letters
of credit, in supply and distribution, in construction, and in carriage (famously,
as in New Zealand Shipping Company Ltd vA.M. Satterthwaite & Co Ltd: The
Eurymedon [1975] AC 154).The patterns of connection might vary: there are
hubs and spokes;chains and str ings;clusters and groups; and so on – but the point
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© 2012The Authors.The Modern Law Review © 2012 The Modern Law Review Limited. (2012) 75(3) MLR 455–474
Published by BlackwellPublishing, 9600 Garsington Road, Oxford OX42DQ, UK and 350 Main Street, Malden,MA 02148, USA
is that, in all these cases, the transactions are wired for connection; they are
networked.That said, why should the law take any notice of such contractual
networks?
To return to the classical mode, the significance of the discrete exchange
between A and B is that it serves to modify the pre-contractual rights and
responsibilities of the parties. Prior to the exchange,A was not required to pay the
now agreed price and neither was B required to supply the now agreed goods or
services. On both sides,the contract modifies the parties’ understanding of their
mutual rights and responsibilities; with the contract in place, the parties’ expec-
tations are modified; and, as the modern law would have it, we regard those
expectations as reasonable because the new responsibilities were freely assumed.
Now, here is the critical question: where the contract between A and B is part of
a network of connected contracts,does this fact fur ther modify the understanding
that the parties have of their respective rights and responsibilities? Or, to put this
more provocatively, does participation in a network modify, or even control, the
parties’ reasonable expectations? On the face of it, it does – otherwise, why would
we bend over backwards (employing implicit offers and acceptances, collateral
contracts, agency,and goodness knows what else) to hold that the parties in Clarke
vDunraven were bound by the competition rules, that the protection afforded by
section 75(1) of the Consumer Credit Act 1974 continues to apply where credit
cards are used by on-line shoppers,and that the stevedores in The Eurymedon were
entitled to the benefit of the limitations written in to the main carr iage contract?
However, if it is only by massaging the classical doctrinal features that the law is
able to give effect to transactional expectations that it independently judges to be
reasonable, this invites another question, namely: would the law operate more
satisfactorily if a doctr ine of connected contracts, or contracts with network
effects, or something of this kind,were to be adopted? Clearly, this is a question
that we should put on hold until we have reviewed Teubner’s thoughts on the
parallel doctrinal issue that has been debated in Germany.
Introducing his six-chapter book, Teubner declares that the focus of his
discussion is ‘on the appropriate legal regulation of business networks, virtual
enterprises, just-in-time systems and franchise chains that are normally concluded
in the form of bilateral contracts, but at the same time give effect to multilateral
(legal) effects’ (73). Characteristically, these business networks ‘pursue common
projects making use of co-operation between autonomous firms’ (92); and,time
and again,Teubner returns to the point that an appropriate legal response must
reflect the various tensions (or institutionalised contradictions) that drive these
networks – for example, the tension between hierarchy (organisation) and
market (contract), between common purpose and individual interest, between
co-operation, and competition,and so on. So, in a typical passage,Teubner writes:
Thus, the legal characterisation of networks needs to be reformulated.The ambigu-
ities, contradictions,collisions and paradoxes that constantly accompany the question
of contract or organisation are not to be considered‘er rors of analysis’, but are rather
to be greeted as mirrors of the productive aspects of networking.They should thus
never be sacrificed to a contradiction-free legal construct by means of which law
denies the existence of the contradictory expectations in favour of an internally
Reviews
© 2012 TheAuthors. The Modern Law Review © 2012The Modern Law Review Limited.
456 (2012) 75(3) MLR 455–474

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