Jean Braucher, John Kidwell and William C. Whitford (eds), Revisiting the Contracts Scholarship of Stewart Macaulay: On the Empirical and the Lyrical, Oxford: Hart Publishing, 2013, 443 pp, hb £60.00
| Date | 01 July 2015 |
| Published date | 01 July 2015 |
| Author | Paul MacMahon |
| DOI | http://doi.org/10.1111/1468-2230.12137 |
Jean Braucher,John Kidwell and William C. Whitford (eds), Revisiting the Contracts
Scholarship of Stewart Macaulay: On the Empirical and the Lyrical,
Oxford: Hart Publishing, 2013, 443 pp, hb £60.00
In 1963, Stewart Macaulay, then a young teacher of contract law at the Uni-
versity of Wisconsin, took the radical step of interviewing some local business-
people and their lawyers about their use of contracts. The result was a
remarkably rich and prescient article (S. Macaulay, ‘Non-Contractual Relations
in Business: A Preliminary Study’ (1963) 28 Am Soc Rev 55), which remains
the starting point for a large body of empirical work on contracting in law,
economics, and sociology. Written contracts and legal sanctions, Macaulay
found, were much less important than legal scholars would like to think. Instead
of parsing the letter of a written contract, Macaulay’s interviewees said they
relied primarily on informal norms of reciprocity and decency. When problems
arose with performance, the parties would usually negotiate adjustments of their
relationship without giving any thought to what the written contract said.
Moreover, Macaulay’s interviewees strove mightily to avoid using legal sanc-
tions to settle their disputes. Even a threat to bring a lawsuit would probably
cause the business relationship to unravel, and anyway legal remedies for breach
of contract were so costly and so weak as to make resort to the law unattractive.
Rather than the fear of suit, the desire to maintain their business relationships
and their commercial reputations motivated parties to act fairly. For these
reasons, Macaulay’s suppliers and manufacturers did not much care if the law
said, for example, that their supply agreement was too vague to be enforceable
as a contract; legal enforceability was simply beside the point. It was not all bad
news for contract law. The paper also sought to identify the circumstances
where parties did use detailed contractual planning (where doing so served an
organisation’s internal needs, where significant problems were foreseen at the
time of the agreement, and where potential injury was great) and those excep-
tional cases where they did resort to legal sanctions (where their business
relationships had broken down, where plaintiffs believed they had been the
victims of fraud or bad faith, and where lawyers held greater sway over the
aggrieved organisation’s decision-making).
Macaulay’s insights provided the grounding for ‘relational contract theory’.
Although definition is notoriously difficult, the starting point for any relational
approach is an empirical claim: the real world of contractual exchange can only
be understood in light of the parties’ relationships. Parties to contracts – espe-
cially, but not only, complex and long-term contracts – are also parties to
relationships of trust. These relationships provide norms distinct from, and
sometimes at odds with, the written contract. Another ‘Mac’ – Ian Macneil –
was responsible for elevating relational insights into something approaching a
‘theory’ (see D. Campbell, L. Mulcahy, and S. Wheeler (eds), Changing Concepts
of Contract: Essays in Honour of Ian Macneil (Basingstoke: Palgrave Macmillan,
2013)). Under the twin influences of Macaulay and Macneil, the empirical claim
that relationships matter was soon translated into normative implications, helping
to fuel criticism of ‘classical’ contract law, which, relational critics argued, treated
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© 2015 The Author. The Modern Law Review © 2015 The Modern Law Review Limited.
708 (2015) 78(4) MLR 695–726
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