Contracts as a Learning Cycle

Abstract

Not all contracts are the same. In fact, a strategic goal among business people is to develop what are called relational contracts. Relational contracts reside at the opposite end of a spectrum in relation to transactional contracts. Transactional contracts are short-term, template-driven, focus on legalese, and do not intend to create a lasting relationship in business that is centered on mutually reinforcing values. The rates of substitution and turn-over are high in transactional contracts. Think of a car rental agreement.

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