Contracts and Contract Law: Challenging the Distinction Between the ‘Real’ and ‘Paper’ Deal

Abstract

This article examines the claim that there are two different and often incompatible ‘worlds’ within which contractual relationships can be placed-a real world created by the parties and an artificial world created by contract law and formal contract documents. This distinction, often made by sociolegal scholars, is usually accompanied by the suggestion that legal reasoning might be improved by more attention to the real world of contracting at the expense of the artificial world of documents and classical doctrine. After examining the relationship between trust and contract, the role of legal institutions in supporting agreement-making and the reasons parties might have for formalizing commercial relationships, the article argues that a sharp distinction between the real and paper deal cannot be drawn and that in many commercial agreements these must be understood as integrated phenomena, rather than wholly discrete aspects of contracting behaviour. The article then considers the capacity of contract law to respond to this finding, with particular reference to the law's approach to uncertainty in agreements and the contextual approach to contract interpretation as developed by Lord Hoffmann in Investors Compensation Scheme and subsequent cases.