Much of the literature about relational contract theory in recent decades has focused on whether courts should enforce contracts in strict, formalist manner, or whether they should use less formal, relational norms that (it is often supposed) the parties use to govern their relationships privately. Now, though, there is a new trend in both literature and practice of trying to use contracts to create trusting relationships among businesses not by threat of strict enforcement, but rather by creating “low enforcement” structures of information sharing and dispute resolution that allow parties to ease into collaborative relationships in a way that minimizes risk. Such contracts are called “braided” contracts because they intertwine more formal and less formal enforcement mechanisms. They are thought to be particularly useful in certain circumstances, such as conditions of high uncertainty (e.g., rapidly changing industries based on scientific research or developing technologies); parties who are not only non-vertically-integrated, but may actually be competitors; and situations where what counts as adequate performance is either hard to specify ex ante or hard to verify ex post.
Business meeting at program conclusion.