Collaborative contract and contract theory

Theory of contract law has difficulties in covering collaborative contracts, because it focuses on adversarial relationships, complete contracts and disputes in courts. Whereas, economic contract theories are not litigation-oriented but focus mostly on explaining how governance structures are chosen and how to safeguard from opportunistic behaviour. Relational contract theory, which sees contract as a relationship, is often applied for collaborative contracts. However, traditional old-fashioned contract law is based on freedom of contract, which allows contracting parties to create their own contracts and build their own framework for collaboration within their private autonomy. These practices of private governance can be called contracting. In this chapter, we argue that the freedom of contract could be used more effectively, were path-dependency and traditional mindset not constraining contract designers. One of the path-dependent constraints is that contracts are still too often written for potential disputes in courts, even when they could be written for the contracting parties to coordinate their collaboration. Practice-oriented and multidisciplinary proactive contracting approaches contracts from ex ante as tools for collaboration between contracting parties. Proactive contracting also approaches contract as a lifecycle process. Like relational contract theory, the proactive contract approach contributes to designing framework for collaboration in business and maintaining the relationship. To develop to a recognized framework theory, proactive contracting needs more interdisciplinary empirical research.