Abstract
We offer a new perspective on measuring the complexity of inter-firm contracts. We define complex contracts as those contracts that contain many elements (clauses) with a relatively large number of interdependencies that also impose a significant cognitive load upon contract parties. Previous studies on contractual complexity employ objective measures such as the number of pages, the amount of kilobytes or the number of provisions to measure this complexity. Following some suggestions in the literature, we argue that the degree to which a contract imposes a cognitive load upon contract parties should be taken as another important dimension of contractual complexity. We develop a conceptual model of the complexity of contracts using a multidimensional perspective where both objective and subjective dimensions are taken into account. Our empirical analysis combines a sample of nearly 400 R&D alliance contracts in the biopharmaceutical industry with a measurement of the cognitive load of these contracts. Our findings show that quantitative, objective measures of complexity, such as length, and objective as well as subjective elements of the cognitive load of contracts, i.e. the information processing effort that contractual parties have to make, do indeed measure different aspects of contractual complexity.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
