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16 July 2020 ·

Ask the Expert: When the Relationship Breaks Down - Be Prepared

In the execution phase of complex contracts, people can and do behave badly. There is a splendid example in the NHS in the UK where a local hospital-based Trust made what a Judge called 'absurd' deductions from the fees of a facilities management contractor. In researching for my PhD and, as published in my book (Commercial Expectations and Cooperation in Symbiotic Contracts) I asked hundreds of commercial and contract managers how they would have dealt with the situation. In particular, I asked them to consider retaliation/tit-for-tat. This is a staple of game theory, much loved of law and economics scholars and economists. The answers surprised me.\r
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In this seminar, I will discuss whether tit-for-tat is a credible strategy in long term modern contracts. I will also, informed by the views of my respondents, discuss the alternatives. Negotiation, relationship building, escalation and governance all come into play and I will address each.


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