Contractual Behaviour Research Articles

Bridging the gap: Predictive contracts in blockchain-achieving recalibration for industrial networks

Unfortunately, within the framework of blockchain contracting, a significant gap exists in comprehending contractual behavior, and the feasibility of predictive contracts has largely remained unexplored. A principal obstacle stems from the absence of a seamless integration between predictive concepts and blockchain technology. This deficiency is attributed to a failure to consider the inherent characteristics of blockchain when developing solutions aimed at improving predictive capabilities within blockchain-based systems. Many existing predictive approaches function externally to the fundamental blockchain framework, rendering them impractical. This has caused the idea of predictive contracts to be seen as unfeasible due to the character of blockchain smart contracts making it hard to do so. This includes its immutability and the inability for changes to be made once deployed. In this research, we introduce the concept of blockchain-based predictive contracting which stems from the theoretical idea of predictive contracting, and substantiate the feasibility of our approach, enabling blockchain smart contracts to adapt to changes in external environments upon which they depend. We attempt to achieve and prove the first phase of this idea, which we term “recalibration”. Here we provide a means for deployed smart contracts to become structurally changeable while responding to external situations without compromising their security. This we believe is the first phase needed for blockchain smart contracts before they can become predictable. Our approach capitalizes on the key-pair structure scheme utilized in existing blockchain systems to create a data signature, facilitating the identification of new smart contracts. We establish rules encompassing a configuration mechanism, empowering smart contracts to recognize newly-introduced agreements. Additionally, we implement an encoding system to enable the blockchain to respond to dynamic data. This we believe will provide a means for blockchain to be used well in industrial applications such as supply aircraft delivery networks and supply chain networks. To anticipate future scenarios, we devise a multi-versioning system that allows smart contracts to evolve over time. Our innovative concept is also demonstrated within a blockchain-based smart contract prediction scheme, ensuring the adaptability of blockchain-based smart contracts. This scheme comprises a smart contract tracing mechanism, an effective smart contract transitioning procedure, and a protocol for generating new smart contracting terms and conditions while preserving inherent trust within the system. Through extensive experimentation, involving opcode and smart contract ID extraction, Solidity Word2Vec model development, a blockchain-based embedding process, and smart contract versioning detection, we introduce the concept of blockchain-based predictive smart contracts. Notably, we observe a significant enhancement as multiple parties engage in complex operations on the blockchain, with an average gas cost of 31374215 Wei for demonstrating smart contractual operations within exogenous conditions. This validates the cost efficiency of our approach over prior methods. Our empirical results affirm the novelty and efficacy of our proposed concept.

Contractual Behavior of Key Participant in Managing Green Office Building Projects

In order to improve the performance of green office building projects, proper contractual behaviour of key participants is perceived as one of the best initiatives, given that it serves as the primary function in guiding the smooth management of green office building projects. This paper aims to identify the criteria in managing green office building projects. It was found that this reports on the results of the content analysis which collected data on design and features of green office building implemented by the designers. A list of GBI -Certified Green Office Buildings under New Construction Category in Malaysia was assessed. Five (5) numbers of office buildings in Klang Valley and Putrajaya area were selected to present features of green office buildings applied by the designer to fulfil the green building criteria hence achieving GBI certification. The features of each green building obtained from various relevant websites were compiled based on the six (6) criteria listed under GBI. Though the system and materials might be slightly different from one green buildings to another, there are similarities in terms design principal; by incorporating advanced green technologies, sustainable energy solutions, innovative energy management systems and rainwater harvesting systems into the design. Thorough consideration has been given by the project team to produce a building that is environmentally, socially and economically friendly. This is achieved by enhancing good passive designs and integrating active (mechanical and electrical) design and system to deliver and to offer significant long-term comfort and savings for the building owners and occupants.

Hayek’s dream: International investment law and the denigration of politics

AbstractThis article argues that the operational logic of international investment law, in part, is to tame states by legally requiring that they behave as if they were profit-seeking enterprises. This is suggested by a small set of awards, arising out of contractual disputes, that work a binary between normal contractual behaviour and sovereign acts of public authority behaviour. Non-contractual behaviour is deemed ‘political’ and likely to give rise to liability under investment law strictures. This complements well Hayek’s approach to the rule of law, where, outside of their ‘framework’ functions, states are expected to behave ‘in the same manner as any private person’. In an age of ever-increasing disparity, this renders it more difficult for states and citizens to take up measures that Polanyi associates with the protective counter movements, shielding citizens from the deleterious effects of free markets.

Local Adaptation of Work Practices: The Case of BancoEstado’s “CajaVecina” Correspondent Banking System

This article contributes to the discussion of everyday domestic finance technologies by looking at CajaVecina, a correspondent banking network coordinated by BancoEstado, a leading Chilean financial institution. Differences in perceptions between actual users and designers of ICT for development projects (ICT2D) emerged from structured interviews with executives of financial intermediaries, customers, and shopkeepers. The extent to which independent merchants operating CajaVecina’s bespoke terminals confront and solve the “design-actuality gap” questioned whether the CajaVecina system enabled neighborhood retail stores to act as a de facto bank branch. Empirical results suggested that was not the case. Instead of following strict contractual behavior, participants in the correspondent banking network addressed a design gap through social interaction and leveraging relationships with repeat customers. This behavior builds on information emanating from what they called “operating quotas.” Operating quotas enabled BancoEstado to diversify risk, document financial services habits, and forecast the performance of merchants (particularly small, independent retail shops). Merchants used trends in operating quotas to tailor services offered through the CajaVecina terminal while aiming to increase the loyalty of trusted customers. These results further the understanding of correspondent banking services aiming to increase financial inclusion by providing evidence of a previously unexplored aspect of these networks, where social dimensions take precedence over economic, financial, and technological aspects.

Common Contractual Behaviour of Key Participants in Civil Engineering Projects

The delivery of civil engineering projects in Malaysia largely has been be set by cost over run, schedule delays, shoddy workmanship. Previous studies have replete that most of the problems whichh inder the project success is related to the unfavourable contractual behaviour of the project key participants who do not adhere to and comply with the terms of the contract in project implementation. Hence, the purpose of this paper is to investigate the factors that hindered the success of civil engineering projects focusing on the aspect of contractual behavior of key participants. TheobjectiveofthisstudyistodeterminethecommoncontractualbehaviorofkeyparticipantsincivilengineeringprojectsinMalaysia.ThedataofthisstudywasobtainedfromprofessionalcivilengineerregisteredwithBoardofEngineersMalaysia(BEM)andGradeG7contractorsregisteredwiththeConstructionIndustryDevelopmentBoard(CIDB)viaaquestionnairesurvey.Basedontheresultfrom288questionnairesurvey,thisstudyhighlightedfive(5)contractualbehaviourofkeyparticipantswhichallthiswhilehinderedthecivilengineeringprojectsuccess.Theywerethedelayof interimpayment,delayofcontractor’sworkprogress,delayofissuingprojectinformation,ineffectivecommunicationbetweenengineerandcontractorandunauthorisedinstructions.Theseverityofcontractualbehaviors’occurrenceisimportanttobeempiricallyresearchedtounderstandthecontractualrootcausesthatlargelyaffectprojectperformanceandeventuallycan comprehensively be placed more concerned for improvement for future projects.

Models of contractual behavior in the context of sectoral markets theory

Methods. The study of models of contractual behavior of economic entities is based on the theoretical and methodological foundations of neo-institutional theory, namely: the theory of the firm, transaction costs, the theory of organizations. Specific methods being used in the study were the following: logical-and-historical method – while analyzing the evolution of views on the process of contracting; general and specific – while highlighting the specifics of different types of agreements; classification – while creating a typology of contracts. Results. The study of the evolution of contract theory as a component of modern theory of industry markets is conducted. The factors that determine the existence of various forms of contracting are identified. Particular attention is paid to the consideration of such factor as specific assets, its impact on the formation of the bargaining power of contracting parties is shown. The specific features of classical, neoclassical contracts and the contract of relations, which is a form of implicit contracts, are highlighted. The role of informal norms in concluding a contract of relations is demonstrated. The process of concluding a contract, which defines the rights and obligations of the parties, as well as measures for liability for non-fulfillment of obligations, is considered in terms of transaction costs and, in particular, opportunistic behavior. Novelty. On the basis of the generalization of theoretical statements of the theory of contracts, the directions of solving the problem of choosing the optimal method of contracting by a firm operating in a market environment are outlined. Practical value. Typology of contracts, as well as analysis of models of contractual behavior, which depends on the choice of a particular type of agreement, allow making effective management decisions at the level of a particular firm, as well as reducing society's transaction costs at the level of national economy.

The Influence of Project Characteristics on Contractual Behaviour of Key Participants in Civil Engineering Projects

This paper described the importance of paying attention on the aspects of project characteristics in understanding the contractual behavior of key participants in civil engineering projects. The purpose of this paper was to identify the project characteristics variables contributing to the unfavorable contractual behavior of key participants in civil engineering projects. An extensive literature review was carried out using content analysis and unveiled nine (9) civil engineering project characteristics that may contribute to the contractual behavior of key participants. They were project type, project size, project scope changes, design changes, site surrounding condition, ground condition, project complexity, procurement method, type of standard form of contract. The findings provide basis for understanding the factor that influence the contractual behavior of key participants in order to comprehend the constraints faced by them in implementing the civil engineering projects. Hence, the initiatives or proactive preventing actions can be suggested in future study to improve the contractual behavior of key participants and eventually will lead to the project success.
 Keywords: Civil Engineering; contractual behavior, project characteristics.

Understanding Post Contractual Turbulence in Public Private Partnerships: Themes and Issues

Although complex realities of governing Public Private Partnerships (PPPs) at the post contractual phase are emerging as major foundations of discord that threatens PPPs sustainability in developing countries (DCs), the nascent nature of the model’s application in most DCs has meant that the specific issues of concern remain obscure and scattered. Using the concept of governance as an orienting lens, an intensive analysis of one of the pioneer PPP projects in the electricity sector in Sub-Saharan Africa is undertaken to explore the main issues. The evidence is drawn from transcripts of interviews with policy, regulative, and operative actors directly involved with and/or familiar with the project. These are supplemented by a review of exclusively accessed and publicly available documents. The findings underscore the primacy of eight governance issues that are organised in three thematic areas including; the roles and responsibilities of actors, regulatory and contractual control, and emergent and complex external stakeholder behaviour. The findings essentially suggest that at the post contractual phase, (a) PPP will be challenged by context specific realities related to how the sector is organized, the prevailing sources of authority, and end user behaviour, (b) PPP agreements are incapable of precisely providing for all emergent realities thus require adaptation and/or complementation, and (c) demonstrate that responses need to be deliberately concerted as well as inclusive of context-relevant actors to guard against a) severely undermining provisions of the existing contract, b) partner (and other external stakeholder) opportunism, and c) counterproductive distortion of balance of power.

Compulsory purchase and the state redistribution of land

Purpose The compulsory purchase of land forms the subject of much legal and urban regeneration research. However, there has been little examination of the contractual arrangements between local authorities and private sector property developers that often underpin the compulsory purchase process. This paper aims to examine local authority/private developer contractual behaviour in this context. Design/methodology/approach An empirical examination of property development contracts made for the “Silver Hill” project in Winchester, a small city in southern England, and the Brent Cross shopping centre extension in north London. Drawing on Macneil’s (1983) relational contract theory, the paper analyses key contract terms and reviews local authority documentation related to the implementation of those terms. Findings The contracts had two purposes as follows: to provide a development and investment opportunity through the compulsory purchase and redistribution of private land; and to grant the private developers participating in the projects freedom to choose if they wished to take up that opportunity. While the contracts look highly “relational”, the scope for flexibility and reciprocity is both carefully planned and tightly controlled. This exposes an asymmetric power imbalance that emerges in and is rearticulated by this type of contractual arrangement. Originality/value The empirical analysis of contract terms and contractual behaviour provides a rare opportunity to scrutinise the local authority-private developer relationship underpinning both property development practice and compulsory purchase.

Opportunism and third-party influence on long-term public contracts

This article illustrates the influence of interest groups on government and concessionaire contractual behavior in long-term public contracts. We show that government political commitments with stakeholders may represent a ‘reputational investment’, which reduces the incentives to enforce the contract and increases the willingness to accept renegotiation proposals. When observed by the concessionaire, particularly concerning ‘politically sensitive’ projects, this situation can be exploited to capture additional quasi-rents from the exchange relationship. Using a simple model and a case study, we show that the interactions of parties with influential stakeholders, in the context of weak institutions, can create favorable conditions for opportunistic behavior.

Significant Factors Affecting Civil Engineering Project Performance

Civil engineering projects trigger the economic growth by providing infrastructure facilities and job opportunities as well as attracting the attention of foreign investments. Due to their significant contributions toward the nation growth, the performance of civil engineering projects has become the upmost concern by the government. Unfortunately, many civil engineering projects in Malaysia are dominantly associated with unsatisfactory performance in terms of cost, time and quality of the delivered products. Therefore, this paper aims to identify the underlying causes which lead to unsatisfactory performance by determining the factors affecting civil engineering projects. The objective of this paper is to identify the civil engineering project characteristics and the quality of Standard Form of Contract (SFoC) adopted and the contractual behaviour of key participants of civil engineering project which affecting the performance. Questionnaires survey were conducted to undertake the research. 124 feedbacks received out of 300 questionnaires distributed to the G7 contractors registered under Construction Industry Development Board (CIDB) and consultant engineer registered under Board of Engineers Malaysia (BEM). The data was statistically analysed using SPSS 21 and descriptive analysis was used for rank assessment of factors. It was found that the top three (3) most significant factors affecting civil engineering project performance are delay in making payment, environment uncertainty and the clarity of SFoC. These factors belong to three categories i.e the contractual behaviour of key participants, project characteristics and the quality of SFoC category. Thus, these categories are paramount to be put more concern on the performance of civil engineering projects in Malaysia.

Significant Factors Affecting Civil Engineering Project Performance

Civil engineering projects trigger the economic growth by providing infrastructure facilities and job opportunities as well as attracting the attention of foreign investments. Due to their significant contributions toward the nation growth, the performance of civil engineering projects has become the upmost concern by the government. Unfortunately, many civil engineering projects in Malaysia are dominantly associated with unsatisfactory performance in terms of cost, time and quality of the delivered products. Therefore, this paper aims to identify the underlying causes which lead to unsatisfactory performance by determining the factors affecting civil engineering projects. The objective of this paper is to identify the civil engineering project characteristics and the quality of Standard Form of Contract (SFoC) adopted and the contractual behaviour of key participants of civil engineering project which affecting the performance. Questionnaires survey were conducted to undertake the research. 124 feedbacks received out of 300 questionnaires distributed to the G7 contractors registered under Construction Industry Development Board (CIDB) and consultant engineer registered under Board of Engineers Malaysia (BEM). The data was statistically analysed using SPSS 21 and descriptive analysis was used for rank assessment of factors. It was found that the top three (3) most significant factors affecting civil engineering project performance are delay in making payment, environment uncertainty and the clarity of SFoC. These factors belong to three categories i.e the contractual behaviour of key participants, project characteristics and the quality of SFoC category. Thus, these categories are paramount to be put more concern on the performance of civil engineering projects in Malaysia.

A preliminary investigation on the effects of characteristics and contractual behaviour on civil engineering project performance

The significant role of civil engineering project is not only to make the lives of people easier and secure but also to trigger the economic growth by providing infrastructure facilities as well as job opportunities. As it is dominantly initiated by government sectors, performance of the civil engineering projects is always observed. This study aims to investigate the characteristics of civil engineering project and the contractual behavior of the key participants and how do these two factors affect civil engineering projects performance. Literature reviews, content analysis and questionnaires survey were conducted to undertake the research. A total of 50 questionnaires were distributed and 10 questionnaires were returned, resulting in a 20% response rate. The research unveiled that performance of civil engineering projects are influenced greatly by the ability to handle the unpredictable character of the civil engineering projects and adequate behavioral management. Apart from that, balancing the factors with high quality of workmanship, avoidance or well managed conflicts and high satisfaction level will ensure performance in projects.

Owner’s Risk Allocation and Contractor’s Role Behavior in a Project: A Parallel-mediation Model

Risk allocation decisions are of critical importance in project management. The present study proposes an explanation for how risk allocation in a contract motivates a contractor to cooperate with a project owner. Theories of risk allocation and trust were used to motivate the research. Using a survey methodology, we collected data concerning 124 construction projects in China. We found that risk allocation influenced the contractor’s role behavior through the contractor’s feeling of being trusted but not the contractor’s trust in the owner. Feeling of being trusted partially mediated the effect of risk allocation on the contractor’s in-role (i.e., contractual) behavior and fully mediated the effect on extra-role behavior. The study introduces a social and psychological view of the impacts of risk allocation to the project and engineering management literature. We contribute to theory by arguing and demonstrating the mediating effect of trust on the relationship between risk allocation and contractor behavior. From a practical standpoint, we conclude that contractual risk allocation has a significant impact on building a trusting relationship between owners and contractors and that contractors who feel trusted perform both contractually mandated actions and actions external to the contract more diligently, resulting in the likelihood of improved outcomes for both parties.

Visual Specification and Analysis of Contract-Based Software Architectures

XCD is a design-by-contract based architecture description language that supports modular specifications in terms of components and connectors (i.e., interaction protocols). XCD is supported by a translator that produces formal models in SPIN’s ProMeLa formal verification language, which can then be formally analysed using SPIN’s model checker. XCD is extended with a visual notation set called VXCD. VXCD extends UML’s component diagram and adapts it to XCD’s structure, contractual behaviour, and interaction protocol specifications. Visual VXCD specifications can be translated into textual XCD specifications for formal analysis. To illustrate VXCD, the well-known gas station system is used. The gas system is specified contractually using VXCD’s visual notation set and then formally analysed using SPIN’s model checker for a number of properties including deadlock and race-condition.

Caveat Venditor: The Conditional Effect of Relationship-Specific Investment on Contractual Behavior

We examine the effect of relationship-specific investment on contract complexity, which has broad implications because complex contracts and vertical integration have similar causal origins. It is usually assumed that transaction cost economics (TCE) implies that relationship-specific investment always has a positive effect on complexity. Using a simple TCE model and the assumption that firms are credit and cash-flow constrained, we predict that the effect can be of opposite sign on opposite sides of a relationship. We also derive hypotheses on omitted-variable bias in OLS estimates of the effect of relationship-specific investments, showing that such biases reduce the probability of finding opposite signs. Our main results are on the empirical side, where we examine these predictions using detailed survey data on a broad sample of agreements made by Romanian firms. Seller relationship-specific investment has a positive effect on contract complexity while buyer investment has a negative effect. This result is obtained from a variety of estimating procedures that address omitted-variable bias in different ways, but not from OLS. The result disappears in the small sample of agreements that involve buyer prepayment, suggesting that the interaction of seller vulnerability and credit constraints drives the results. Hence, financial and legal development are substitutes in solving transactional problems. The broader context of the paper is therefore institutional development. The paper shows that firms invest more in law when courts are of better quality.

Exploring the Main Factors Affecting Consumer Choice of Mobile Phone Service Provider Contracts

This study aims to investigate the main factors affecting a consumer’s choice of mobile phone service provider contracts, and to determine which of these factors are important in a consumer’s decision-making process. As this decision is particularly pertinent within the contractual behavior setting, there is a need to explore the main factors that shape mobile phone subscriber choices when entering into a mobile phone telecommunication service contract. To do so, a set of mobile interrelated contract dimensions and a set of mobile service provider interrelated dimensions were identified and tested. The convenience sampling technique was employed and 400 questionnaires were distributed to mobile phone subscribers in Jordan with a response rate of 78.5%. By using the regression analysis, result analysis revealed that the main factor affecting consumer choices was “contract features”, with a relative importance of 41%. After a set of mobile phone contract hypotheses were identified and tested, it was found that contract price, with about 15% relative importance, was the main contract feature that affected consumer choices, followed by the size of data that were related to the number of minutes and/or number of messages offered within the mobile service contract package. In addition, “company factors”, with about 18% relative importance, were found to affect consumer choice of service provider contracts. The principal issue affecting consumer choice decisions was “switching cost”, which was the highest relative importance element of company interrelated factors and found to influence mobile subscriber contracts choice significantly. However, other company factors like signal strength and sales outlet availability had no significant impact on consumer choices and ranked less for consumer-choice priority. More attention is needed from scholars to study the effect of other possible mobile phone contract dimensions from customers’ perspective.

Rethinking contract design: Why incorporating non-legal drivers of contractual behavior in contracts may lead to better results in complex defense systems procurement

Defense acquisition programs are plagued by surging delays and cost overruns. In particular, contract management of defense acquisition programs has been identified as 'high risk' - and threatening to project results. This article examines how contracts, as legal mechanisms, may be disruptive and obstruct cooperation between the DoD and contractors. The main observation this article makes is that tensions between the norms set forth in contracts and other non-legal norms can become a major reason for problems in defense procurement. It explains why these tensions may undermine cooperative behavior between contractors and the DoD and can become a source of disappointing acquisition program results. A framework is provided for identifying such tensions, and contract design principles are proposed to enhance cooperation and eliminate these tensions when drafting contracts for defense acquisition and other complex programs.

The Next Level in Contract Design: Incorporating Non-Contractual Mechanisms when Negotiating and Drafting Complex Contracts

Defense acquisition programs are examples of complex contracts plagued by surging delays and cost overruns. In particular, contract management of defense acquisition programs has been identified as “high risk” - threatening project performance and leading to the Department of Defense (DoD) overpaying for projects. Empirical findings suggest that parties’ contractual behavior - especially the ability to work together cooperatively - is an important success factor. Empirical research also indicates that, in complex projects, such as defense projects, contracts are often experienced as a cause of disruption of cooperation. In addressing this problem, contract literature has mainly focused on how to improve contracts by making them better enforcement mechanisms. This article takes a different approach. It specifically focuses on how and why the contract, as a legal mechanism, may obstruct cooperation between the DoD and contractors. It proposes a new normative framework that includes other variables that influence parties’ contractual behavior, such as social norms and economic rationality, which are frequently ignored in contract design. The main observation this article makes is that tensions can arise between the norms set forth in contracts and other non-legal norms that are particularly problematic in complex contracts such as defense contracts. It explains why these tensions may undermine cooperative behavior between contractors and the DoD and become a source of disappointing acquisition program results. Finally, a framework is provided for identifying these tensions, and design principles are proposed to enhance cooperation by foreseeing and eliminating these tensions when drafting contracts for defense acquisition programs.

A Case Study in Collaborative Technology and the Intentionally Relational Contract: Building Information Modeling and Construction Industry Contracts

This article argues that the digital world is beginning to play a key role in moving commercial actors toward intentionally relational contracting practices by fostering and rewarding interdependence, adaptability, and reciprocity among otherwise autonomous, self-interested actors in the marketplace. Using a case study involving the most important technology affecting contractual relations in the construction industry, this article explores how collaborative technologies may be expanding opportunities for relational contract in commercial transactions. The study shows how building information modeling is reshaping contractual behavior in the industry by facilitating and encouraging a previously unimagined degree of collaboration among design professionals, builders, specialty trades, suppliers, manufacturers, and owners and operators. The result could be a truly transformative shift toward relational contract in the building sector.