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Welcome to the Contracting Paradox

In: Contracting in the New Economy

Author

Listed:
  • David Frydlinger

    (Cirio Law Firm)

  • Kate Vitasek

    (University of Tennessee at Knoxville)

  • Jim Bergman

    (Commercial Officers Group, Inc)

  • Tim Cummins

    (World Commerce & Contracting)

Abstract

In this chapter, The New Economy: Welcome to the Contracting Paradox, we review a contracting paradox that is emerging in the new economy. Practitioners have the delusion that they write contracts to make plans. However, we cannot accurately plan and predict the future. They trick ourselves into believing they can plan by creating contracts—and therein lies the paradox and the folly. The formal relational contracting model is a way for organizations to more effectively cope with the challenges of the future in a highly complex and risky environment. The solution, relational contracts—more specifically, formal relational contracts, is not new. Relational contracts have existed as long as humans have been fulfilling commercial exchanges. Formalizing the approach is new, and it is an approach that represents a new opportunity to create greater value and mitigate risk, for parties such as McDonald’s and Dell, who find themselves in that commercial exchange.

Suggested Citation

  • David Frydlinger & Kate Vitasek & Jim Bergman & Tim Cummins, 2021. "Welcome to the Contracting Paradox," Springer Books, in: Contracting in the New Economy, edition 1, chapter 0, pages 3-19, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-65099-5_1
    DOI: 10.1007/978-3-030-65099-5_1
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