The importance of being relational: comparative reflections on relational contracts in Australia and the United Kingdom

Abstract

The notion of the relational contract, previously limited to academic circles, is now being articulated by some courts. The consequences are threefold. Firstly, these judicial decisions are challenging the conception of agreements in the common law. Secondly, these decisions acknowledge the particularity of some long-term commercial relationships and shift the spotlight onto the relations of the parties. Thirdly, they are being used to integrate obligations to act in good faith. This article will show how these decisions implement the developing theory of relational contracts. The article will discuss recent developments in the United Kingdom and Australia and reflect on the parallel course the two jurisdictions are taking. By providing a bird’s-eye view of normative changes affecting some long-term transactions, the aim of the article is to reflect on how contract law is being reshaped by the recognition that, in some contracts, the relationship, not self-interest, is the vital thing, demonstrating a move away from traditional contract law theory.