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

Author

Listed:
  • Vitasek, Kate

    (Graduate and Executive Education, USA)

  • Frydlinger, David

    (Cirio Law Firm, Sweden)

  • Kuchler, Magnus

    (Partner, EY Advisory Services, Sweden)

  • Lundin, Alexander

    (Director, EY Consulting Services, Sweden)

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.

Suggested Citation

  • Vitasek, Kate & Frydlinger, David & Kuchler, Magnus & Lundin, Alexander, 2022. "Why and how formal relational contracts will improve your next corporate real estate outsourcing deal," Corporate Real Estate Journal, Henry Stewart Publications, vol. 11(2), pages 173-185, February.
    • Handle: RePEc:aza:crej00:y:2022:v:11:i:2:p:173-185
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    More about this item

    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;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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