The Proactive Contracting Approach

Abstract

This chapter presents the history of the proactive contracting approach, discusses its theoretical underpinnings and basic tenets, and gives directions for possible future research in the field. Proactive contracting was introduced some 25 years ago. It refers to a way of using contracts and contracting to identify possible problems, prevent them before they occur, and make use of contracts and contracting processes to guide and support business success. The approach regards contracts as not only legal tools, but also economic, managerial, and social artifacts that can be designed to meet the needs of contracts’ multiple users. Since its introduction, the approach has been adopted by researchers from various disciplines, such as industrial management, information design, and law, and it has been applied in many contexts. The approach has also influenced the emergence of preventive and proactive law in the US, proactive law in Europe, and legal design. This chapter identifies five core tenets of proactive contracting: the ex ante approach, the multifunctional role of contracts, prevention and promotion dimensions, multiprofessional collaboration, and user-centered contract design. Finally, it reviews key developments in proactive contracting, including its applications in diverse fields such as project business, collaborative contracts, responsible and sustainable business, and AI-assisted legal design. By advancing the integration of Law & Management, this chapter highlights the transformative potential of proactive contracting in aligning legal tools with organizational and societal goals.