The Many Functions of Contracts (Doctoral defense: Anna Hurmerinta-Haanpää, 22.5.2021, contract law, sociology of law)
Contracts are fundamental for today’s networked business practices. Various professionals plan, design, and implement contracts, yet many of them find contracts difficult or even impossible to understand. In addition, contracts are mostly designed to protect parties in case something goes wrong––not to support collaboration.
In her doctoral dissertation, Anna Hurmerinta-Haanpää argues that many of the counterproductive contracting practices stem from traditional economic and legal theories. Drawing on alternative approaches to contracting, such as transaction cost economics, the relational view, functional contracting, the relational contract theory, and proactive contracting, she explores how organizations use contracts in their interorganizational exchange relations and how these different uses affect relational governance, such as trust.
Her study found that in addition to the three established functions––safeguarding, adaptation and coordination––contracts are used to serve at least four additional functions: codification, internal management, collaboration, and policy. However, safeguarding seemed to be the most often used function, and sometimes these safeguarding clauses were very one-sided and framed in a manner that highlighted the negative consequences of a contract breach instead of incentivizing successful completion of the contract.
Overemphasis on safeguarding clauses and preventive contract framing have several negative implications. For example, they can hinder the creation and development of relational governance and encourage conflict. Also, these kinds of contracts generate higher transaction costs compared to contracts that support relational governance.
– I urge both academics and practitioners to acknowledge and make use of the various functions of contracts that I present in my dissertation. Adopting this kind of a functional approach to contracting brings about changes in the ways we understand contracts, their functions, and their effects on exchange relations. It may also change the way we interpret contracts and develop general principles of contract law and contract law theory. Finally, it changes the ways in which legal scholars teach and study contracts, Ms. Hurmerinta-Haanpää concludes.
LL.M. Anna Hurmerinta-Haanpää defends her dissertation in Sociology of Law entitled ”The Many Functions of Contracts–How Companies Use Contracts in Interorganizational Exchange Relations”.
The audience can participate in the defence by remote access: https://utu.zoom.us/j/65123483768
Opponent: Professor Soili Nystén-Haarala, University of Lappland
Custos: Assistant Professor Mika Viljanen, University of Turku