Towards Collaborative Contracting

Tiger Smelling FlowerA contract is not a document; it is a particular type of legal relationship that we have power to create and to shape to meet our needs and objectives.

Once we grasp that truth, we might start to ask whether there is a need in some sectors – especially those involving the supply of employment services, human resources and human services – to re-appraise the type of legal relationships that we create and the way we create them; because what we put into our contracts says a lot about the relationship that we will get out of them.

As I’ve been working through the text of the unfair terms in standard small business contracts changes to the Australian Consumer Law over the past few weeks, I’ve been thinking about the types of clauses that are going to come in for closer scrutiny.

They must all have three things in common.

  1. They would cause a significant imbalance in the parties’ rights and obligations arising under the contract; AND
  2. They are not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; AND
  3. They would cause detriment (whether financial or otherwise) to a party if they were to be applied or relied on.

You might wonder why anyone would want to contract on that basis. But typically, “no refund” clauses; “all-care-no-responsibility” clauses; risk-shifting clauses, where the risk-receiving party is in a weaker position to control for the risk; unilateral renewal without price renegotiation; and clauses that allow one party to shift the goal posts would all qualify (potentially) as unfair terms.

There are many others.

Hopefully, the reforms will encourage businesses that use standard form contacts to have them reviewed before the reform commencement date on 12 November, 2016.

Hopefully, many will act in time to remove potentially unfair clauses.

But I wonder if there is now a need for a deeper level reappraisal.

Standard terms of business have evolved over hundreds of years and there is probably a commercial-evolutionary reason why they now contain terms that are considered to be unfair.

Indeed, they often seem to reflect much of what was worst about Nineteenth Century laissez faire commercial practice.

Their fiercely competitive, tigerish nature increasingly puts them at odds with more contemporary  approaches that recognise the social dimension of doing business collaboratively – that re-frame contemporary business, not as contest but as co-production of reciprocally beneficial outcomes; that see parties not as combatants or competitors, but as collaborators and  co-contributors.

I am talking about a less individualistic, more social approach to doing business.

Although we often speak of “client partnerships” and the like, the alternative to competitive/combative business relationships is not partnership in the strict sense. It is something else that we are only just starting to identify – far less define. Nevertheless, there is a developing sense of the need for fair dealing, co-operation and mutuality.

Appreciative futurist, Jeremy Scrivens tweets,

“We will look back at today as a transition from #industrial #corporations to new forms of business as connected combinations of strengths”[1]

He identifies the future of work as “social business at scale”[2] and sees collaborative and innovative communities being sustained by a “culture of kindness”[3].

Similarly, Jacob Morgan, author of the Future of Work (2014) speaks of “a shift from profit to prosperity”.

The sort of deeper level reappraisal that is now beginning to be spoken about will engage more of that type of thinking.

We are going to see the development of new forms of contract that are not problem focused (i.e. provide against things going wrong) but purpose focused (i.e. map the means of getting things right).

I like the way Peter Pula of Axiom News describes what often happens.

If you focus on a problem and you design around a problem and you build actions around a problem, what you’re more likely going to get… is more of the problem. [4]

So, what do we do if we choose to re-frame our terms of business – the basis on which we create business relationships – not on the problem but on getting things right? What would terms of business, re-framed in that way, look like? How would they differ from what we currently make do with?

I started to develop some thoughts around these questions at a workshop presentation for AMRANZ in Sydney in July earlier this year and then again during an RCSA workshop held in Brisbane in August.

It seems to me that we can provisionally identify seven key differences between competitive (or combative) terms of business and collaborative terms of business. Those differences reflect alternative approaches to doing business together and fundamentally different business relationships.

Let me put them out there and see if they might engage discussion, because I think there is a need to reappraise how contractual relationships are shaped in important areas such as employment services, human resources, and human services. And I think these some businesses that operate in these areas might already be starting to ask the right questions.

Here’s the comparison.

competitive-v-collaborative-drafting-copy

It will be fascinating to watch as collaborative approaches to doing business develop and to observe and shape the way in which innovative firms harness positive social forces that are already disrupting traditional business practices.

I would love to hear your views about this approach and to hear your stories of where you might have encountered it or how you might adopt it yourself…

 

Andrew C. Wood

 

 

[1] https://twitter.com/JeremyScrivens/status/773814027830960128  accessed 09/09/2016 at 1536 AEST.

[2] https://twitter.com/JeremyScrivens/status/774062658660110336  accessed 09/09/2016 at 1538 AEST.

[3] https://twitter.com/JeremyScrivens/status/764304877413556224  accessed 09/09/2016 at 1544 AEST.

[4] Co Creating Generative Conversations in Community, Axiom News (2016)  http://axiomnews.com/co-creating-generative-space-community  accessed 10/09/2016 at 1800 AEST.

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