Edited by Reinhard Bachmann and Akbar Zaheer
Chapter 12: Learning About Contracts: Trust, Cooperation and Contract Law
Simon Deakin 1. Introduction The aim of this chapter is to explore the potential of evolutionary-theoretical approaches in the social sciences in understanding the role played by contract law in promoting cooperation and trust. A widely held view in the sociology of law is that legal rules and sanctions are marginal to contractual relations, and this has led to scepticism concerning the role which the legal system can play in supporting trust. This position rests on a series of empirical studies which are interpreted as having shown that the parties to business transactions make little use of either contract law or of formal agreements in their dealings with one another, relying instead on informal norms, tacit understanding and ‘trust’ (Macaulay, 1963; Beale and Dugdale, 1975; Collins, 1999: ch. 6). Against this, there are economic accounts of contract which see the law as directly inﬂuencing economic behaviour and outcomes. In the economic analysis of law, legal rules are understood to operate as surrogate prices in such a way to shape incentives (Veljanovski, 1996). ‘Trust’ simply denotes the presence of incentives for cooperation (Williamson, 1996). This position is based on certain well-known a priori assumptions about the capacity for rational action of economic agents. These views are separated by a disciplinary divide which makes dialogue between them diﬃcult. Economists are sceptical of the empirical studies since they rely on small sample sizes and so arguably do not generate statistically signiﬁcant results (Hviid, 2000: 53). Sociologists, and lawyers writing from...
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