What Good Is Contract Law? Who Uses It? When And How? Essay
“What good is contract law? Who uses it? When and how?” These questions asked by Stewart Macaulay in his seminal paper on contract law and the market are still just as relevant today as they were 60 years ago. Research on contracts since Macaulay, that is to say, the legal documents that evidence marketplace exchanges, show that contract are used less or more in different transactions depending on the circumstances, nature of the parties and the market, and area business. Despite the tendency of legal professionals to assume that contracts are a key component of marketplace transactions, the following quotation from a businessman speaks to the commercial realities:
"You can settle any dispute if you keep the lawyers and accountants out of it. They just do not understand the give-and-take needed in business."
Since Macaulay’s piece was published, numerous papers have been written on the use or non-use of contract law in business to business transactions. In this paper “contract law” is used to refer to the formalized law of contract that is enacted in jurisdictions either through courts or legislation. Lisa Bernstein demonstrated that the cotton industry has opted out of the legal system almost entirely, with members instead relying on their own private legal system to regulate business transactions. Futures contracts, entirely unenforceable under the common law, were successfully used to build a strong futures market…