Why and how formal relational contracts will improve your next corporate real estate outsourcing deal

Kate Vitasek, David Frydlinger, Magnus Kuchler and Alexander Lundin
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Kate Vitasek: Graduate and Executive Education, USA
David Frydlinger: Cirio Law Firm, Sweden
Magnus Kuchler: Partner, EY Advisory Services, Sweden
Alexander Lundin: Director, EY Consulting Services, Sweden

Corporate Real Estate Journal, 2022, vol. 11, issue 2, 173-185

Abstract: Relational contracting is not new. But the concept of formal relational contracting is new, especially in the corporate real estate/facility management (CRE/FM) arena. This paper shares the latest research and thinking on relational contracts and explains how using a formal relational contract can boost collaboration and trust with your CRE outsourcing partner. Since the early 1960s, pioneering legal scholars such as Stewart Macaulay and Ian Macneil began promoting the value of the softer ‘relational’ side of contracts. In fact, Macaulay’s original 1963 article on the topic would become the most-cited article in contract law. These pioneers shone a light in the legal and economic fields that fostered intense interest. Still, the concept of using relational contracting practices and relational contracts has never really taken off, specifically in CRE/FM agreements. We believe the time has come for formal relational contracts to take centre stage, especially in light of the need for flexibility and collaboration due to the COVID-19 pandemic.

Keywords: corporate real estate (CRE); facilities management (FM); relational contracts; outsourcing; Vested; Vested outsourcing; contracting; collaborative contracting; Oliver Hart; Stewart Macaulay; Ian Macneil; COVID-19 (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:aza:crej00:y:2022:v:11:i:2:p:173-185

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