1 I use relational contract theory here as a label to describe the socio-legal approach to contractual obligations generally, rather than to refer specifically to Ian Macneil's theory of exchange relationships.

2 Macaulay, S Relational contracts floating on a sea of custom? Thoughts about the ideas of Ian Macneil and Lisa Bernstein 2000] 94 Northwestern Uni LR 775 Google Scholar at 783.

3 For examples of judicial recognition of the idea of ‘relational contracts’ see Lord Steyn in Total Gas Marketing Ltd v Arco British Ltd [1998] 2 Lloyds Law Rep 209 at 218, Baird Textile Holdings Ltd v Marks & Spencer plc [2001] EWCA Civ 274, [2001] 1 All ER (Comm) 737 and Clarke J in Balmoral Group Ltd v Borealis (UK) Ltd [2006] EWHC 1900 (Comm), [2006] 2 Lloyd's Rep 629 at [339].

4 See the essays in Campbell, D, Collins, H and Wightman, J (eds) Implicit Dimensions of Contract (Oxford: Hart, 2003)Google Scholar and For criticism of this line of scholarship see and . J Wightman provides a useful definition of the elusive notion of ‘implicit understandings’ in contracts: ‘the knowledge, practices and or norms pertaining to contracting in general (or an individual transaction) of which the parties to a particular contract are actually aware, (or can in the circumstances, reasonably be expected to be aware) but which are not typically rendered express in their contracting activity’: ‘Beyond custom: contract, contexts, and the recognition of implicit understandings’ in

5 D Campbell and H Collins ‘Discovering the implicit dimensions of contracts’ in Campbell, Collins and Wightman, ibid, p 25.

6 Scott, RE, ‘The case for formalism in relational contract’ (2000) 94 Northwestern Uni LR 847 Google Scholar at 852; Gava, above n 4. On the theoretical aspects of the debate see

7 See, eg, Charny, D The new formalism in contract’ (1999) 66 Uni Chi LR 842 CrossRefGoogle Scholar; ; ; Scott, above n 6; ; , and

8 Gava and Greene, above n 4, at 616–620. See also Deakin, S and Wilkinson, F Contracts, co-operation and trust: the role of the institutional framework’ in Campbell, D and Vincent-Jones, P (eds) Contract and Economic Organisation (Aldershot: Dartmouth, 1996) pp 100–101.Google Scholar

9 Therefore manifesting a ‘neo-classical’ approach to contract, rather than a fully relational one; see I Macneil ‘Reflections on relational contract theory after a neo-classical seminar’ in Campbell, Collins and Wightman, above n 4, p 207.

10 Macneil, ibid, p 208. See also Collins, H Objectivity and committed contextualism in interpretation’ in Worthington, S (ed) Commercial Law and Commercial Practice (Oxford: Hart, 2003) p 189.Google Scholar

11 Amsterdam, AG and Bruner, J Minding the Law (Cambridge MA: Harvard University Press, 2002) p 140 Google Scholar (original emphasis).

12 See Campbell and Collins, above n 5, pp 28ff. On the flexible approach to modification see Williams v Roffey [1991] 1 QB 1.

13 [1998] 1 All ER 98 at 114–115. Lord Hoffmann echoes Lord Wilberforce, who famously stated, ‘No contracts are made in a vacuum: there is always a setting in which they have to be placed’: Reardon Smith Line Ltd v Hansen-Tangen [1976] 3 All ER 570 at 574.

14 See The Starsin [2004] 1 AC 715.

15 [2000] All ER (D) 902.

16 Per Mellor J, quoted in Court of Appeal judgment [2000] All ER (D) 902 at [18].

17 See, eg, Proforce Recruit Ltd v Rugby Group Ltd [2007] EWHC 1621, [2008] 1 All ER (Comm) 569; Kahn v Dunlop Haywards (DHL) Ltd [2007] All ER (D) 244.

18 [2006] EWCA Civ 54, [2006] 1 Lloyd's Rep 566.

19 Ibid, at [47]–[50].

20 Ibid, at [53]

21 [2008] All ER (D) 210.

22 Karl Llewellyn's idea of what underlies common law method; see discussion by Rakoff, T The implied terms of contracts: of “default rules” and “situation sense”’ in Beatson, J and Friedmann, D (eds) Good Faith and Fault in Contract Law (Oxford: Oxford University Press, 1995) pp 201ff.Google Scholar

23 [2002] EWHC 1650 (Comm).

24 Ibid, at [53].

25 Baird Textile v Marks & Spencer, above n 3, has rapidly become the classic example of judicial blindness towards implicit dimensions of agreements.

26 See Walford v Miles [1992] 1 All ER 453.

27 Brownsword, R Contract Law: Themes for the Twenty-First Century (Oxford: Oxford University Press, 2nd edn, 2006) pp 139ff.Google Scholar

28 Campbell and Collins, above n 5, pp 25–27.

29 See H Collins ‘Competing norms of contractual behaviour’ in Campbell and Vincent-Jones, above n 8, p 67 at p 93.

30 Macneil, above n 9, p 207.

31 Campbell and Collins, above n 5, p 42.

32 A judge may often face censure from a higher court in considering such evidence. See, eg, the Court of Appeal's criticism of the first instance judge in Emcor, Drake & Scull v McAlpine [2004] EWCA Civ 1733 at [6].

33 For recent examples of the phenomenon see Football League Ltd v Edge Ellison (a firm) [2006] EWHC 1462 (Ch); euNetworks Fiber UK Ltd v Abovenet Communications UK Ltd [2007] EWHC 3099 (Ch).

34 Baron, J and Epstein, J Is law narrative?’ (1997) 45 Buffalo L Rev 141 Google Scholar at 147.

35 Twining, W Rethinking Evidence (Cambridge: Cambridge University Press, 2nd edn, 2006) p 290.CrossRefGoogle Scholar

36 Ricoeur, P [JB Thompson (transl)]Hermeneutics and the Human Sciences (Cambridge: Cambridge University Press, 1981) p 278.CrossRefGoogle Scholar

37 That there is a fundamental distinction between ‘narrative’ and ‘story’ is an established, if somewhat controversial, position within literary theory. The distinction revolves around the chronological order of events (‘story’) and the manner in which the events are presented to an audience (‘narrative’, also ‘plot’ and ‘discourse’); see, eg, Forster, EM “The Story” and “The Plot”’ in Forster, EM Aspects of the Novel (Harmondsworth: Penguin, 1963) at pp 40–42 Google Scholar and 87, reproduced in McQuillan, M (ed) The Narrative Reader (Abingdon: Routledge, 2000) pp 44–46 Google Scholar; Genette, G [JE Lewin (transl)] Narrative Discourse (Ithaca: Cornell University Press, 1980) pp 25–30 Google Scholar; Bal, M [van Boheemen, C (transl)] Narratology (Toronto: University of Toronto Press, 2nd edn, 1997) pp 5–6.Google Scholar

38 Baron and Epstein, above n 34, at 147.

39 Brooks, P Narrativity of the law’ (2002) 14 Law and Literature 1 CrossRefGoogle Scholar at 1.

40 Baron and Epstein, above n 34, at 151.

41 Winter, SL The cognitive dimension of the Agon: between legal power and narrative meaning’ (1989) 87 Mich L Rev 2225 CrossRefGoogle Scholar at 2228.

42 One critic of the positivist conception of law often revealed in interdisciplinary work in law and literature is Baron. See Baron, J Law, literature, and the problems of interdisciplinarity’ (1999) 108 Yale LJ 1059 CrossRefGoogle Scholar at 1078–1079.

43 See, eg, Scheppele, KL Telling stories’ (1989) 87 Mich L Rev 2073 CrossRefGoogle Scholar and

44 [1932] AC 562.

45 See Jackson, BS Law, Fact and Narrative Coherence (Liverpool: Deborah Charles Publications, 1988) p 98.Google Scholar

46 Eg, Farber, DA and Sherry, S Telling stories out of school: an essay on legal narratives’ (1993) 45 Stan L Rev 807.CrossRefGoogle Scholar

47 See ‘Solle v Butcher (1950)’ in Mitchell, C and Mitchell, P (eds) Landmark Cases in the Law of Restitution (Oxford: Hart, 2006) p 325 Google Scholar. The full reference for the case is [1950] 1 KB 671. I am grateful to the anonymous referee for drawing this chapter to my attention.

48 Ibid, p 326.

49 Ibid, p 327.

50 Ibid, p 347.

51 [2003] UKHL 62, [2004] 1 AC 919.

52 Another example is provided by S Wheeler's reading of Debenham v Mellon (1880) 6 App Cas 24, where the law's characterisation of the relationship between husband and wife as involving contractual agency rendered Mrs Mellon largely invisible in the proceedings and her personal story unheard: ‘Going shopping’ in Mulcahy, L and Wheeler, S (eds) Feminist Perspectives on Contract Law (London: Glasshouse Press, 2005) pp 40–42.Google Scholar

53 Although it should be noted that the approach in Solle was disapproved by the Court of Appeal in Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2002] EWCA Civ 1407, [2003] QB 679.

54 [2007] EWHC 1056 (Comm), QBD.

55 See Armour, J and Deakin, S Norms in private insolvency: the ‘London Approach’ to the resolution of financial distress’ (2001) 1 Journal of Corporate Law Studies 21 CrossRefGoogle Scholar at 24.

56 Armour and Deakin studied the practices of workouts as they operated during the 1990s. On the basis of interviews conducted with participants they found that while workout norms were not legally binding, they were largely self-enforcing and were rarely transgressed: ibid, at 37–49.

57 Above n 54. These passages are excerpts from the lengthy testimony set out in the judgment at [161].

58 Ibid, at [411].

59 In relation to the evidence generally, the judge remarked that witnesses for both sides encountered difficulty in ‘having to deal with relatively complex questions based on unfamiliar legal concepts’: ibid, at [414]. See also at [36] and [37].

60 White, H The value of narrativity in the representation of reality’ in Mitchell, Wjt (ed) On Narrative (Chicago: University of Chicago Press, 1981) p 1 Google ScholarPubMed (original emphasis). This ‘translation’ is often regarded as the main problem that narrative tries to address. Amsterdam and Bruner attribute this idea to Roland Barthes, above n 11, p 117.

61 Above n 5, p 41.

62 NatWest v Rabobank, above n 54, at [98].

63 See Kennedy, D Form and substance in private law adjudication’ (1976) 89 Harv LR 1685.CrossRefGoogle Scholar

64 R Brownsword ‘After Investors: interpretation, expectation and the implicit dimension of the “new contextualism”’ in Campbell, Collins and Wightman, above n 4, pp 123ff.

65 These terms come from Bruner, J The narrative construction of reality’ (1991) 18 Critical Inquiry 1 CrossRefGoogle Scholar at 11.

66 Eg, Lord Denning's opening to his speech in Miller v Jackson [1977] 3 All ER 338 at 340–341. Discussed in Jackson, above n 45, pp 94–97 and in Twining, above n 35, pp 303–306.

67 Ewick, P and Silbey, S Subversive stories and hegemonic tales: toward a sociology of narrative’ (1995) 29 Law and Society Review 197 CrossRefGoogle Scholar at 213.

68 See, eg, R Dworkin's metaphor of the chain novel as illustrative of the value of integrity and textual coherence in the law: Dworkin, R Law's Empire (London: Fontana, 1986) pp 228–232 Google Scholar; also ch 11 and at 987–995.

69 White, JB The Legal Imagination (Chicago: University of Chicago Press, abridged edn, 1985) p 243.Google Scholar

70 Ibid, pp 246–247.

71 Henderson, L Legality and empathy’ (1987) 85 Mich LR 1574 CrossRefGoogle Scholar at 1592. There is considerable controversy concerning the extent to which legal reasoning is free of emotional variables; see at 366ff.

72 White, above n 69, p 247.

73 Lopez, G Lay lawyering’ (1984) 32 UCLA L Rev 1 Google Scholar at 33.

74 Baron, J Resistance to stories’ (1994) 67 S Cal LR 255 Google Scholar at 264.

75 Ibid.

76 Ibid, at 259.

77 Delgado, R Storytelling for oppositionists and others. a plea for narrative’ (1989) 97 Mich L Rev 2411 CrossRefGoogle Scholar at 2413.

78 Baron and Epstein, above n 34, at 175.

79 Ibid, at 171.

80 Above n 11, pp 121–122.

81 Above n 5, p 28.

82 Lopez, above n 73, at 5.

83 Binder, G and Weisberg, R Literary Criticisms of Law (Princeton: Princeton University Press, 2000) p 205.Google Scholar

84 Ibid, p 234.

85 Amsterdam and Bruner, above n 11, p 140.

86 Patterson, above n 68, at 988.

87 Winter, above n 41, at 2275.

88 Brooks, above n 39, at 1.

89 Delgado, above n 77, at 2415.

90 Bruner, above n 65, at 4.

91 Twining, W The Great Juristic Bazaar (Dartmouth: Ashgate, 2002) pp 436–437 Google Scholar, footnotes omitted.

92 Posner, R Law and Literature (Cambridge MA: Harvard University Press, revised edn, 1998) p 349.Google Scholar

93 Farber, D and Sherry, S The 200,000 cards of Dimitri Yasurov: further reflections on scholarship and truth’ (1994) 46 Stan LR 647 CrossRefGoogle Scholar at 648–649; Posner, ibid.

94 Farber and Sherry, ibid, at 655.

95 Ibid, at 652.

96 See Scheppele ‘Narrative resistance and the struggle for stories’, above n 43, at 85; also Baron, above n 74, at 257.

97 MacCormick, above n 68, p 221. MacCormick himself rejects the cynical view.

98 Posner, E A theory of contract law under conditions of radical judicial error’ (2000) 94 Northwestern Uni LR 749.Google Scholar

99 See Conti, D Narrative theory and the law: a rhetorician's invitation to the academy’ (2001) 39 Duquesne LR 457 Google Scholar at 458.

100 Ibid, 473.

101 MacCormick, above n 68, pp 224–25.

102 See generally Papke, D and McManus, K Narrative and the appellate opinion’ (1999) 23 Legal Studies Forum 449 Google Scholar at 450. See also Jackson, above n 45, p 18; MacCormick, above n 68, p 226.

103 Jackson, ibid, p 99.

104 See Hermann, D A structuralist approach to legal reasoning’ (1975) 48 S Cal LR 1131 Google Scholar at 1133–1139.

105 Jackson, above n 45, p 110. Hermann posits the possibility of ‘subconscious rationality’, of which narrative is an example, contrasting with deductive, inductive and analogical reasoning which are indicative of legal reasoning processes: ibid, pp 1133–1134

106 Winter, above n 41, at 2228.

107 See, eg, Pope, D Supersize plea’ (2007) 13 September, LS Gaz 16.Google Scholar

108 On cost, see, eg, McKendrick's, E discussion, ‘The interpretation of contracts: Lord Hoffmann's restatement’ in Worthington, S (ed) Commercial Law and Commercial Practice (Oxford: Oxford University Press, 2003) p 139 Google Scholar. On judicial error see Posner, above n 98, and Gava and Greene, above n 4.

109 S Macaulay ‘The real and the paper deal: empirical pictures of relationships, complexity and the urge for transparent simple rules’ in Campbell, Collins and Wightman, above n 4, p 52.

110 Bernstein, ‘Merchant law in a merchant court’, above n 7, at 1819.

111 Above n 54, at [375].

112 Baird Textiles v Marks & Spencer, above n 3, provides an excellent example of this.

113 Above n 54, at [97].

114 Eg, that workouts should be underpinned by a spirit of cooperation is borne out by the non-binding INSOL Principles for a Global Approach to Multi-Creditor Workouts (published October 2000), available at http://www.insol.org/statement.htm. The fourth principle states that ‘the interests of relevant creditors are best served by [lenders] co-ordinating their response to a debtor in financial difficulty’. The seventh principles states that ‘Information obtained for the purposes of the process concerning the assets, liabilities and business of the debtor and any proposals for resolving its difficulties should be made available to all relevant creditors...’. See also, Armour and Deakin, above n 55.

115 Above n 67, at 211.

116 Posner, above n 98, at 770.

117 Perhaps reflecting something deeper in human nature; see Macneil, I and Campbell, D (eds) The Relational Theory of Contract: Selected Works of Ian Macneil (London: Sweet and Maxwell, 2001) pp 116–120.Google Scholar

118 Paragon Finance plc v Nash [2001] EWCA Civ 1466, [2002] 1 WLR 685 at [47].

119 See Armour and Deakin, above n 55, at 37–49. They point out that the Bank of England originally had a role as ‘enforcer’ of norms of cooperation that underpinned workouts, but that enforcement gradually devolved to the individual banks themselves as the Bank of England's role in regulating the banking industry was taken over by the Financial Services Authority.

120 Macaulay, above n 109, pp 84ff.

121 Bernstein ‘Private commercial law in the cotton industry’, above n 7.

122 Charny, D Non-legal sanctions in commercial relationships’ (1990) 104 Harv LR 375 CrossRefGoogle Scholar at 428; Scott, above n 6, at 852.

123 Bernstein ‘Private commercial law in the cotton industry’, above n 7, at 1743 and 1776–1777; Bernstein ‘Merchant law in a merchant court’, above n 7, at 1808–1809; Scott, RE The death of contract law’ (2004) 54 Univ of Toronto LJ 369 CrossRefGoogle Scholar at 375.

124 Scott, above n 6, at 852. See also Deakin and Wilkinson, above n 8, p 111.

125 Bernstein, ‘Merchant law in a merchant court’, above n 7, at 1796ff.

126 Collins, above n 4, pp 128–132.

127 Ibid, p 137.

128 NatWest v Rabobank, above n 54, at [112].

129 Ibid, at [101] and [113]. The economic underpinning of this argument – that the choice of formalism and non-disclosure involves a cost–benefit analysis – will not be examined here. On this see Craswell, R Taking information seriously: misrepresentation and nondisclosure in contract law and elsewhere’ (2006) 92 Virginia L Rev 565 Google Scholar at 569.

130 Charny, above n 122, at 408–409.

131 On these points see Collins, above n 29, p 93.

132 Illustrated respectively in Blackpool and Fylde Aero Club v Blackpool Borough Council [1990] 3 All ER 25 and Williams v Roffey [1991] 1 QB 1.

133 See discussion of Williams v Roffey in Collins, above n 4, p 148.

134 Above n 5, p 49.