1. Workshop on Contractual Flexibility By Thomas D. Barton

2. Associations with the Word “Flexibility” For me, “contracts” consist of three distinct but overlapping relationships: – 1. an “exchange” relationship, voluntarily transferring goods, services, or use of property Exchange

3. Associations with the Word “Flexibility” 2. a “personal” relationship involving qualities like trust, loyalty, empathy, and cooperation; but also suspicion, competitiveness, and potential exploitation Personal

4. Associations with the Word “Flexibility” 3. a “legal” relationship formalizing the exchange relationship—and perhaps some of the personal relationship as well—and enabling each party to call upon the State to back up particular rights and duties embedded in the contract. Legal

5. The Three Relationships of Contract Exchange Relationship Personal Relationship Legal Relationship

6. Associations with the Word “Flexibility” All three of these relationships are crucial for us to: – identify an agreement as a “contract;” and – for that contract to be successful.

7. Associations with the Word “Flexibility” For me, “flexibility in contracts” means 3 things: – 1. latitude, pragmatic variability, or accommodation within or among any of these relationships; – 2. the opposite of flexibility, i.e., “stability,” because every successful relationship requires both flexibility and stability; and – 3. “creativity,” which has some relationship to both flexibility and stability.

8. Is Flexibility Needed in Contracts? Yes; all three relationships, in every contract, require some flexibility as well as stability. Arguably, however, all three relationships of contract are less intense in a contract that involves a single transaction like selling my book tomorrow for €50, than for a contract involving a dense, long-term joint venture. – In other words, the flexibility demands (and probably also the stability demands) are less for the single transaction, and more for the joint venture.

9. Flexibility in Contract Practice In practice, the three relationships acquire flexibility in different ways: – The exchange relationship can be modified in quality, quantity, or other attributes as needs or costs change; – The behaviors and attitudes of the personal relationship can change as people communicate and react to one another;

10. Flexibility in Contract Practice – The legal relationship can be varied: at formation by choice of law clauses or by overriding default rules; or during performance by formal modification or by how the parties perform toward one another; Or after repudiation or breach either by the law itself or by negotiated settlement.

11. The Barriers to Flexibility Barriers to flexibility arise because of: – 1. Lack of attention within each realm—i.e., the exchange, the personal, and the legal—on the overlap and dependence that each has on the other two relationships; and – 2. Lack of communication among the parties to the contract and between them and the drafters of the agreement, about ultimate interests and purposes of the contract.

12. My Research My contracts research has addressed flexibility only indirectly, as it comes up in: – 1. Preventive/Proactive Law; – 2. Intellectual, social, and economic history; and – 3. most recently, “Collaborative Contracts.”

13. Needed Research “Flexibility in contracting” could certainly benefit from research concerning: – 1. Does the legal relationship stifle flexibility in either the exchange or the personal relationships of contract? – 2. What types of contracts most need more flexibility?

14. Needed Research – 3. what mechanisms that introduce better flexibility are least de-stabilizing? Can devises or methods (like better communication) be found that simultaneously improve both flexibility and stability? – 4. what is the relationship between flexibility and creativity? In designing contracts for greater flexibility, should we also consider methods for enhancing creativity or innovation?