Contracts in one form or another have been around for millennia and our modern day lives are awash with them. Early contracts were about bartering where parties traded goods or services for something of equal value.
Complex bartering was difficult but the advent of money simplified matters. And with the emergence of writing complex arrangements were formalised in tablets of clay, or on papyrus or paper so that they could be recorded and, if required, enforced.
Today simple transactions occur daily in exchange for money. Buying a cup of coffee, taking a taxi, catching a train, or even topping up a ‘phone occurs seamlessly with few, if any, words being exchanged verbally, let alone in writing. But, nevertheless, legally binding contracts have occurred despite the simplicity of coming into existence, swiftness of execution and the ease of extinguishment. The contract fundamentals of offer, acceptance, and consideration have been achieved. Each party receives a benefit, and each suffers some detriment such as having to make the coffee or drive the taxi or, for the buyer, paying.
However, for complex and intricate contracts these are inevitably in writing for absolute clarity. These contracts, just like a taxi-ride, are agreements to uphold a promise which, although private in nature are enforceable under Law. Typically, the contract documents are based on tried and trusted standards but can also be bespoke. In any event the contract describes the requirements that must be fulfilled as well as the parties’ liabilities and obligations and their rights and entitlements, effectively the “conditions.”
Conditions of Contract
Parties in forming a contract agree to the “Conditions of Contract”. They should comply with them too, after all they are their law. Some conditions may require that the parties behave in a certain manner. For example, should anything untoward happen then one party or the other may have to provide a formal notification to the other in writing, not just on an email or through a WhatsApp group message. Contracts can also include for formal submissions and their approval as well as payments and how they should be applied for and also paid.
A failure to comply with a condition is not necessarily a breach of contract but may obviate certain ‘rights and entitlements’. After all, for a ‘right or entitlement’ to be preserved one’s ‘liabilities and obligations’ should be met.
Certain conditions, particularly with respect to notifications, can seem to be onerous and may be seen by the parties as an administrative burden. Most contracting parties will see such contract administration as a necessity. For others who have had long-term and trouble-free relationships, then the rigour of a contract can be seen as unnecessary, and a few unwritten rules prevail with ad hoc meetings in case of any difficulty. There are also those who adopt an even more relaxed position…after all isn’t the ‘contract’ only needed when times are bad or in the aftermath of something unexpected or unanticipated going wrong!
Rules of Contract?
When it comes to ‘contractual relationships’ and when something is going or has gone wrong, we may hear, “there’s no need to be contractual” or “we know each other” or even “we’ve always done it that way.” In such circumstances the conditions of the private law of the contract may have easily been set aside in the honeymoon period and wild enthusiasm of the early days of a contract and, unbeknownst to the parties they are actually playing to a set of rules.
Rules are defined as “a set of explicit or understood regulations or principles governing conduct or procedure.” Some parties, in an effort to create an amicable relationship and avoid being seen as confrontational ignore the formality of the required ‘Conditions’ in an effort not to offend the other party. Contracts aren’t about friendship, they are legal undertakings and, while amicableness is obviously preferable over hostility, they should be cordial with mutual respect and politeness.
If the formality of the ‘conditions’ degrades then the contract conditions may be difficult to enforce. The resultant rules may be of little use in any dispute and, just as ‘rules are made to be broken’ conditions aren’t. If a contract condition is not followed this could be the thin end of a potentially very thick wedge and the start of corner cutting. As corners are trimmed the original intent of any conduct to promote ease of contract administration can so easily be forgotten.
Codes and Familiarity
It may seem a clever idea to allow for administrative flexibility and simplicity in the light of an ‘onerous’ contract. However, if formality is not maintained this allows the parties to become familiar. It is said that ‘familiarity breeds contempt’ because any bad qualities will become exposed and mutual respect is diminished. Familiarity can, sometimes, encourage friendship and liking but, in any dispute some friendships can come to an abrupt and confrontational end.
Even familiarity with a code can become contemptuous. In the movie Pirates of the Caribbean one of the protagonists when invoking the right to parley under the ‘pirate code’ is informed that the ‘code’ is more a set of “loose guidelines.” Such looseness is open to a broad and flexible interpretations, and the strict dress code of Conditions of Contract degenerates into allowing casual and informal wear.
Parties are free to interpret their contract and how they should behave, as long as they mutually agree along with their principles and sponsors of course. However, if or when things go wrong, and a dispute arises then the sweetness and light of a casual relationship can quickly change. Parties will delve into their mutual contract and may be forced to involve a third party in the form of a mediator, arbitrator, or judge. It is then that their contempt for their own law will become apparent, and any third party may have a challenging time deciding on who is wrong or right.
Conclusions
Contracts are the means of formalising an agreement between two parties. The formality of a contract requires that the conditions that govern process are followed. If conditions are ignored, or subject to less rigour than required a contract is being neglected.
The resultant familiarity between the parties could, as with many relationships lead to contempt. If, or when, there is a dispute there will be a need to seek the intervention of a tribunal and the rules of engagement will be based on the Conditions of Contract.
If parties don’t care for their contract, they are being careless. Acting carelessly can easily result in negligence which is, legally speaking, a wrong. When both parties are wrong then we should remember that “two wrongs don’t make a right” and in any dispute they may well wish that they had followed the contract with strict formality rather than casual familiarity.
Bio:
Malcolm Peart is an UK Chartered Engineer & Chartered Geologist with over thirty-five years’ international experience in multicultural environments on large multidisciplinary infrastructure projects including rail, metro, hydro, airports, tunnels, roads and bridges. Skills include project management, contract administration & procurement, and design & construction management skills as Client, Consultant, and Contractor.