A contract, what for?

Publié le 16 . 10 . 2020
Dernière mise à jour 12 . 11 . 2020

After 18 months of research as part of the master’s degree Innovation by Design at the ENSCI-Les Ateliers, we share with you key reflective and action elements extracted from our founder’s thesis : “Shaping the law to restore its function?”. Contract

First episode : A contract, what for ?

For lawyers, a contract is an “agreement of wills intended to give rise to, modify, transfer or extinguish obligations”1.

Performing a service, selling a good, paying a debt…

The “contract is the law of the parties”, “a fundamental rule of social organization that flows through time like through space: most foreign legal systems state this rule, though sometimes in a different way”.2

The economical theory, on the other hand, is interested in its rationality. Contracts are hybrid forms of regulation between the market and a company. According to Olivier Williamson they are part of “transaction costs” when two economic players exchange goods or services. According to him, contracts are tools made necessary by (i) the limited rationality of economic players3 and (ii) the opportunism of these agents4. As the contract cannot anticipate all possible alternatives, a player may be tempted to adopt an opportunistic behaviour to further his or her own interests at the expense of those of others.

Sociology provides broader answers to the question of the function of contracts with respect to users. Max Weber devoted a significant part of his Sociology of Law – to the study of the evolution of the theory of contracts. He distinguished between the status-contract of the pre-modern times and the function-contract resulting from economic exchanges.

■       The status contract is a contract of fraternalization, that totally modifies the social situation/position of the contracting parties: for example, the contract of vassalage in feudal times.

■       Conversely, the function contract only relates to the supply or exchange of services or goods, without modifying the status of the parties. According to Weber, the function contract is a “formal legal construction of exchange”: this is the form that the law has constructed to enable, guarantee and perpetuate economic exchanges.

Max Weber identifies three levels of reality of contracts:

1. Economic exchange: the parties need an instrument to give a specific legal value to their exchange, referring to the actual law of the contract;

2. The second level contains the rules that regulate trade;

3. The third level is the one containing the “legal thoughts” which “treats the contract as a concept and establishes its logical links with the other concepts of a given legal system”.5

Weber’s analysis focuses on legal thinking: according to him, this is where the connection between the evolution of economic exchanges and the transformation of contract law is most clearly identified. However, Weber considers that due to the “historical phenomena of professionalization, formal rationalization and nationalization of legal regulation”, there is a very clear separation between the facts and the law, and between the social and the legal fields. For Weber, contract law has been built up independently by the “specific group of professional lawyers”, so that the contract would be a “pure question of law”.

Weber had therefore noticed, long before the appearance of Microsoft Word, which considerably lengthened legal texts, what was to become a gap between the law and its users.

Weber also highlights the crucial role played by procedural and evidence law in the evolution of contracts: The settlement contract by means of which adversaries agree to end their trial would be the conceptual ancestor of the modern function-contract. On this basis,“ Legal theory conceived a contract as a pact between enemies rather than as a process of fraternization or the subjugation of an individual to a group or an all-encompassing social relationship.”


The modern contract is therefore distrustful by nature.

According to Weber, the logic of the settlement contract imposing a final and very precise determination of rights and obligations, “legal thinking was brought to the more general idea of a contract whose content would be restrictively delimited by the conscious projections of two individual wills pursuing a specifically legal purpose.”

Hence the development of contracts by lawyers and for lawyers or judges.

But what do companies do with contracts?

Jean-Guy Belley, Professor of Law at Mc Gill University, had the “curiosity” to study “living law” and in 1996 devoted a very comprehensive study to Alcan’s supply contracts.6

Even though the study is quite old, it is quite rare/unique for academics to be interested in the practice of law within companies. Moreover, the socio-legal typology of contracts he drew up at the time remains largely relevant.

Belley identifies 5 main types of contracts within Alcan.

■          The legal contract: these are contracts for which the company has an authorisation, approval, verification or authentication process to be followed by buyers and managers in charge. These are “contracts of a non-standard nature” in terms of their purpose (“large-scale projects” ; “construction contracts”; “technology contracts”), their financial importance, the real estate rights they involve (“financial lease”; “universal lease”) or by their extension in time (“lease agreement”; “service agreement”; “annual agreement”; “purchase agreement”). Clearly, the legal contract serves a useful purpose as a “insurance policy” in the event of a dispute: compliance with the legal framework prevails over all other considerations. Its function is defensive.

Interestingly, Belley also identifies a “rationality in value” of the legal contract: it is a form of external communication, of public relations by which the company “expresses its adherence to and its support for a political body whose fundamental values it shares.”. According to Belley, this rationality in value justifies the costs of harmonisation with the state legal system, even if it turns out that calling legal guarantees and litigation are rare in practice in economic exchanges.

In other words, even though contracts are unlikely to end up before a judge in practice, their “super-compliance” with the legal system remains relevant in terms of public relations.

Presse-citron © Philippe Starck

 

If we continue the analysis from a designer’s point of view, the function of a legal contract is to convey a message, and its main user is not a judge but th
e company’s clients, investors and economic partners. A parallel could be drawn with Starck’s lemon squeezer, which does not work as a lemon squeezer (the legs are too high, it slips when you squeeze it…), but which is a perfectly successful “excuse for conversation.

Poster for the exhibition Paris Design Week 2019. © Amurabi

 

To ensure this message-function, a designer’s approach could be based on the principles of composition, text placement, cut-outs, visuals, typography, focal point, hierarchy…

■        The bureaucratic contract: this is a contract that must first and foremost comply with the company’s internal policy. Typically, the purchase order. Here, organizational legality, i.e. compliance with the “internal legality” of the company, takes precedence over contractual normativity or harmonization with the state legal order. With a touch of humour, Belley observes that “the constraints imposed by the management system (of bureaucratic contracts) on exchange remind that (…) the needs to be satisfied are those of the organization and not of its representatives.”

Anyone who has read the T&Cs, purchase orders and other general terms and conditions of use knows that these documents are not designed for their readers.

In the eyes of a designer, thus, the function of the bureaucratic contract should be to fit in as well as possible into the company’s processes, but to do so, the users of the contract should be taken into account: buyers, office staff, clients…

Don Norman7‘s approach – a “user-centred” design would find application here: the contract design would be based on the needs and interests of the user, focusing on the production of easily usable and understandable content. In particular, affordance – the ability of an object or system to suggest its use, its function in an intuitive way for the user – would be especially useful.

If a good designer must always, when confronting the user with an artifact, “make sure that the user is able to determine what to do and to say what is going on”8, making “instructions for use” useless, a designed contract would not only be easily understandable but would also allow its users (non-lawyers) to apply it on their own in practice.

■        Standard contract: this is a contract in which the strategic objectives of the organization and the norms derived from them prevail over the parties’ project or the rationality of a given exchange (e.g., supply contract to maximize the purchasing power of the company, or a subcontracting contract).
Belley observes that the standard contract involves the transit of rules from the company’s head office to each of its subsidiaries, and from international production sites to the local level.

This is a classic case that remains totally relevant: the legal department of the head office issues standard contracts that are particularly protective of the company’s interests (notably in terms of guarantees, liability), necessarily unbalanced, even authoritarian, which are intended to be applied by all subsidiaries worldwide and to take precedence over specific situations.

These standard contracts would therefore be exclusively the business of lawyers. But according to Belley, these contracts reflect the company’s strategic objectives – yet as they stand, they are not understood by the company’s agents that are outside the legal profession.

What would be a designer’s point of vue?

The function of these contracts is not only to convey a message but to reveal their latent value, to ensure a posture. Hatschuel’s work on “Parure (“ornament”) & Pointe”9 sheds a striking light: placing ornament on an object “transforms the object and illuminates it”. At the same time, the intrinsic value of the object thus adorned is revealed: the ornament makes visible its latent value.

The ornament makes an “extension of the object”, that has new “appreciative attributes”, but the object retains its identity. A red oven may become a luxury item, but it’s still an oven.

The “pointe”, on the other hand, “disrupts” the very identity of the object, which is transformed. Its function changes.

The project for Regenesi plays with the essentials: starting from a leaf and moving from the second dimension to the third dimension by generating origami shapes that become sometimes a tray, a cup, a basket. By changing slightly the shape, the form offers another function.

Does placing an ornament on a standard contract (or legal document) reveal its latent value? We will try to answer this question with the examples analysed in Part II.

Belley identifies two other forms of contracts:

■      “the community contract”, which refers to the existence of a of a commitment to a community as a whole and defines a general economic exchange project10.

■      “the moral contract” which is part of the normativity of a particular relationship established over the years between two individuals or two organizations11.

Due to time constraints, and to the extent that they are less frequent, they are not discussed here.

Frise These


The next article: “The phenomenon of small prints and blind consent” will soon be available.


1. Stoffel-Munck P., Malaurie P., Aynès L., Law of Obligations, Sept. 2018
2. Laurent AYNES – Professor at the University of Paris I, Panthéon-Sorbonne Cahiers du conseil constitutionnel n° 17 (dossier: law and contract) – March 2005
3. According to Olivier Williamson (Nobel Prize 2009), agents have limited cognitive abilities. When the environment is complex, they cannot consider all possible events and perfectly calculate the consequences of their decisions.
4. Consequence of limited rationality.
5. Weber Max, Sociology of Law, Introduction and translation by Jacques Gros-Claude, PUF, ed. 2013.
6. Jean-Guy Bellay, “Max Weber and the theory of contract law”, Law and Society, 1988 9 pp. 281-300
7. Cognitive scientist who has focused his work on the mechanisms of cognition, emotion, action, memory, and perception, which sought to apply the principles of cognitive psychology to the field of everyday life and design. Don Norman, Author of “The Design of Everyday Things” in 1988, and first “User Experience Expert” at Apple in 1993.
8. Norman, 2002, p.188
9. Armand Hatschuel, “Quelle analytique de la conception? Parure et pointe en design”, in “Le Design, essai sur des théories et des pratiques”, Flamand, 2006.
10. Example: in exchange for the water and human resources that the region provides to the company and to compensate for damages done to the environment caused by its operations, Alcan has an obligation to provide the regional community with major economic benefits from its operations.
11. This type of contract encourages the emergence of a consensual vision of the objectives and constraints of the exchange to be achieved. It generates expectations and obligations that are more often felt or taken for granted than formally expressed.

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