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Narrativising contract law

Published online by Cambridge University Press:  02 January 2018

Catherine Mitchell
Catherine Mitchell*
Affiliation:
University of Hull
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Abstract

Socio-legal scholarship in contract maintains that the classical law is ineffective in regulating commercial agreements, and that the law should be more attentive to the role played by relational norms of cooperation and implicit understandings in business dealings. This paper explores the extent to which the parties' own narratives about their business relationship, as presented to a judge through testimony, can be both a source of information to judges about how business is conducted and a corrective to the classical contract law mindset, which favours the operation of individualist over cooperative norms in the resolution of commercial disputes. The paper examines a body of ‘law and narrative’ scholarship which underlines narrative's power to subvert traditional legal norms. It also considers some of the difficulties with relying on party narratives as evidence of the implicit dimensions of commercial agreements, but concludes that such narratives may have a role to play in the development of a more relationally constituted contract law and are thus worthy of closer scrutiny.

Type
Research Article
Information
Legal Studies , Volume 29 , Issue 1 , March 2009 , pp. 19 - 46
Copyright
Copyright © Society of Legal Scholars 2009

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References

1 I use relational contract theory here as a label to describe the socio-legal approach to contractual obligations generally, rather than to refer specifically to Ian Macneil's theory of exchange relationships.

2 Macaulay, S Relational contracts floating on a sea of custom? Thoughts about the ideas of Ian Macneil and Lisa Bernstein 2000] 94 Northwestern Uni LR 775 Google Scholar at 783.

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4 See the essays in Campbell, D, Collins, H and Wightman, J (eds) Implicit Dimensions of Contract (Oxford: Hart, 2003)Google Scholar and For criticism of this line of scholarship see and . J Wightman provides a useful definition of the elusive notion of ‘implicit understandings’ in contracts: ‘the knowledge, practices and or norms pertaining to contracting in general (or an individual transaction) of which the parties to a particular contract are actually aware, (or can in the circumstances, reasonably be expected to be aware) but which are not typically rendered express in their contracting activity’: ‘Beyond custom: contract, contexts, and the recognition of implicit understandings’ in

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13 [1998] 1 All ER 98 at 114–115. Lord Hoffmann echoes Lord Wilberforce, who famously stated, ‘No contracts are made in a vacuum: there is always a setting in which they have to be placed’: Reardon Smith Line Ltd v Hansen-Tangen [1976] 3 All ER 570 at 574.

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25 Baird Textile v Marks & Spencer, above n 3, has rapidly become the classic example of judicial blindness towards implicit dimensions of agreements.

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57 Above n 54. These passages are excerpts from the lengthy testimony set out in the judgment at [161].

58 Ibid, at [411].

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78 Baron and Epstein, above n 34, at 175.

79 Ibid, at 171.

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88 Brooks, above n 39, at 1.

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90 Bruner, above n 65, at 4.

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95 Ibid, at 652.

96 See Scheppele ‘Narrative resistance and the struggle for stories’, above n 43, at 85; also Baron, above n 74, at 257.

97 MacCormick, above n 68, p 221. MacCormick himself rejects the cynical view.

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101 MacCormick, above n 68, pp 224–25.

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103 Jackson, ibid, p 99.

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105 Jackson, above n 45, p 110. Hermann posits the possibility of ‘subconscious rationality’, of which narrative is an example, contrasting with deductive, inductive and analogical reasoning which are indicative of legal reasoning processes: ibid, pp 1133–1134

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110 Bernstein, ‘Merchant law in a merchant court’, above n 7, at 1819.

111 Above n 54, at [375].

112 Baird Textiles v Marks & Spencer, above n 3, provides an excellent example of this.

113 Above n 54, at [97].

114 Eg, that workouts should be underpinned by a spirit of cooperation is borne out by the non-binding INSOL Principles for a Global Approach to Multi-Creditor Workouts (published October 2000), available at http://www.insol.org/statement.htm. The fourth principle states that ‘the interests of relevant creditors are best served by [lenders] co-ordinating their response to a debtor in financial difficulty’. The seventh principles states that ‘Information obtained for the purposes of the process concerning the assets, liabilities and business of the debtor and any proposals for resolving its difficulties should be made available to all relevant creditors...’. See also, Armour and Deakin, above n 55.

115 Above n 67, at 211.

116 Posner, above n 98, at 770.

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120 Macaulay, above n 109, pp 84ff.

121 Bernstein ‘Private commercial law in the cotton industry’, above n 7.

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123 Bernstein ‘Private commercial law in the cotton industry’, above n 7, at 1743 and 1776–1777; Bernstein ‘Merchant law in a merchant court’, above n 7, at 1808–1809; Scott, RE The death of contract law’ (2004) 54 Univ of Toronto LJ 369 CrossRefGoogle Scholar at 375.

124 Scott, above n 6, at 852. See also Deakin and Wilkinson, above n 8, p 111.

125 Bernstein, ‘Merchant law in a merchant court’, above n 7, at 1796ff.

126 Collins, above n 4, pp 128–132.

127 Ibid, p 137.

128 NatWest v Rabobank, above n 54, at [112].

129 Ibid, at [101] and [113]. The economic underpinning of this argument – that the choice of formalism and non-disclosure involves a cost–benefit analysis – will not be examined here. On this see Craswell, R Taking information seriously: misrepresentation and nondisclosure in contract law and elsewhere’ (2006) 92 Virginia L Rev 565 Google Scholar at 569.

130 Charny, above n 122, at 408–409.

131 On these points see Collins, above n 29, p 93.

132 Illustrated respectively in Blackpool and Fylde Aero Club v Blackpool Borough Council [1990] 3 All ER 25 and Williams v Roffey [1991] 1 QB 1.

133 See discussion of Williams v Roffey in Collins, above n 4, p 148.

134 Above n 5, p 49.