Contracting for the unknown and the logic of innovation

This paper discusses the components of contracts adequatefor governing innovation, and their microfoundations in the logic of innovative decision processes. Drawing on models of discovery and design processes, distinctive logical features of innovative decision making are specified and connected to features of contracts that can sustain innovation processes and do not fail under radical uncertainty. It is argued that if new knowledge is to be generated under uncertainty and risk, 'relational contracts', as usually intended, are not enough and a more robust type of contracting is needed and it is actually often used: formal constitutional contracts that associate resources, leave their uses rationally unspecified, but exhaustively specify the assignment of residual decision rights and other property rights, and the decision rules to be followed in governance. The argument is supported by an analysis of a large international database on the governance of multi-party projects in discovery-intensive and design-intensive industries

Business-friendly contracting : how simplification and visualization can help bring it to practice

One thesis of this book is that the legal function within businesses will shift from a paradigm of security to one of opportunity. This chapter embraces that likelihood in the context of business contracting, where voices calling for a major shift are starting to surface. It explores how contracts can be used to reach better outcomes and relationships, not just safer ones. It introduces the concept of business-friendly contracting, highlighting the need for contracts to be seen as business tools rather than exclusively as legal tools, and working as business enablers rather than obstacles. By changing the design of contracts and the ways in which those contracts are communicated—through simplification and visualization, for example—legal and business operations can be better integrated. Contracts can then be more useful to business, and contract provisions can actually become more secure by becoming easier to negotiate and implement.fi=vertaisarvioitu|en=peerReviewed