Encyclopedia of Economic Law Journal

The Nature and Characteristics of Relational Contracts with an Emphasis on Their Functions in the Supply Chain and Outsourcing

Document Type : Original Article

Authors

fatemeh Farhan Far 1
jalil ghanavati 2

1 PhD in Private Law , Department of Law, University of Tehran, Qom, Iran

2 Associate Professor, Department of Law, University of Tehran, Qom, Iran.

https://doi.org/10.22067/economlaw.2026.97392.1517
Abstract
The expansion of continuous and complex business relationships in supply chains and outsourcing has revealed the limitations of the traditional contractual model, which is primarily based on the ex ante specification of obligations and their formal enforcement. Relational contracts, emphasizing continuity, cooperation, trust, flexibility, and continuous adaptation between the parties, provide a framework for responding to circumstances that cannot be fully anticipated or regulated at the time of contract formation. This study aims to examine the nature of relational contracts and analyze their functions and position in supply chain and outsourcing relationships. Employing a descriptive-analytical method and drawing on library-based sources, the study examines the theoretical foundations of relational contracting, its distinction from classical and neoclassical contractual models, and the conditions and functions of relational contracts in long-term commercial relationships. The findings indicate that relational contracts, as a novel approach to contract law, can enhance the efficiency of supply chain and outsourcing relationships by facilitating continuous adaptation to unforeseen circumstances, strengthening cooperation and information sharing, promoting joint problem-solving, learning, and value creation, and supporting relationship-specific investments. Moreover, the self-enforcing nature of such contracts relies on the future benefits of the relationship, trust, reputation, reciprocal commitments, and the possibility of terminating the relationship.

Keywords

relational contracts
supply chain
Supply chain management
outsourcing
Subjects
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Encyclopedia of Economic Law Journal
Volume 33, Issue 29 - Serial Number 29
September 2026
Pages 223-244

  • Receive Date 14 April 2026
  • Revise Date 21 August 2026
  • Accept Date 08 September 2026

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