Confidence in the Negotiating Circumstances of Contracts

Maria Thereza dos Santos Pereira
Lawyer at Marcos Martins Advogados

This is a summary of the importance of trust between the parties to a legal transaction before the obligation arises from the parties’ declaration of will, which requires preparation from everyone involved in technical knowledge about the object of the contract, in law for formalization and negotiation skills, so that the instrument is finally considered more than legal: a fair contract.

Since the mid-1990s, we have been experiencing the “Crisis of the Legal Deal”, because the classic theories that cover legal deals do not deal in detail with contracts in which the will is mitigated, such as adhesion contracts, which even with inequalities in relation to the loss of autonomy, are considered valid and effective.

The intention is not to discredit these theories, because they are not wrong, but outdated or not fully adapted to today’s society, as some authors have shown when they reread them, such as Clóvis do Couto e Silva, Cláudia Lima Marques and Enzo Roppo, who bring a doctrinal approach to this new phase of 21st century contracts, to highlight the importance of protecting trust, indicating the conversion of contract law from a liberal state that places too much value on the autonomy of the will, to a state with more social objectives in the face of a more globalized society, which demands an ideology with more flexibility in order to achieve what is fair.

In this sense, Schmidt Neto (2019) teaches:

"A contractual theory in which the supremacy of individual will gives way to the legitimization of economic freedom adapted to the new conditions of capitalism. It defends the protection of weaker contracting parties and the relativization of obligation not only for reasons of equity and justice, but as a protection of the functioning of the market itself, since efficient entrepreneurs should prevail not by abusing their dominant position, but 'by improving the quality and lowering the price of products, by technological innovation, by reducing internal costs and by rationalizing production and distribution processes"

What we see in practice is that market situations generate obligations without the Law theoretically justifying what is happening in social reality, since contractors impose prices and clauses that can be considered abusive, without discussion, since all the other suppliers in the same line of business do so in the same way under the justification of the nature of their service, leaving the contractor with few opportunities for negotiation, who ends up accepting the conditions with just one “click”.

In this context, it can be seen that the defining element of the legal business would be the market circumstances, no longer the will.

In the current legal system, it is assumed that the declaration of will is the result of a previous volitional process and is incorporated into the legal transaction. However, in the current scenario, the central importance of the will is removed from the core of the factual support, shifting the focus to the other market circumstances, which has little to do with trust in the negotiation and the expectations of the contracted party.

In a capitalist society, with mass relationships, undermined by exacerbated consumption, marketing and advertising that enchant consumers, leading them to standardized contracts, in which the will is drastically limited, it seems right that contemporary scholars argue that the birth of the obligation comes from “trust in the business circumstances”, not necessarily the declaration of will.

Thus, the declaration can no longer be the only aspect to be assessed by the science of contracts; there must be a better understanding of the theoretical and dogmatic organization of the law as a whole, given that the rule was created in a liberal environment, in a period when the will still had the central importance that it shares today with other principles and which may include the aspect mentioned above (trust in the negotiating circumstances). Protecting trust in the negotiation phase is fundamental to achieving justice in contract law.

Although we need rules in the name of legal certainty, since rules objectify interests, on the other hand their pure and simple application can promote injustice in practice.

“The main purpose of the theory of trust is to defend the legitimate expectations that arise between the contracting parties when the obligations that are mutually assumed are agreed upon, creating a contractual bond between them.” The theory of trust was enshrined in the 2002 Civil Code and it can be said that when interpreting the various clauses of a contract, the duties that are expressed by the parties and give rise to a common understanding of the content of the statement should be considered binding. Thus, the appreciation of trust is relatively recent in the Brazilian legal system, which leads to a lack of technical or dogmatic rigor (SCHMIDT, 2019).

As principles represent values and are optimization mandates, since they aim to provide guidance for the application of laws and allow for flexibility in the application of the Law as they promote the adaptation of the rule to the specific case, subjectivity arises, which demands intensive work on those who are going to operate the Law.

Fernanda Tartuce (2016) teaches that some cultural factors can be considered, however, the appreciation of our system and our professionals for written laws can give rise to greater interest in the subject. Even so, for effective operationalization, professional training must be broader and more practical, in order to develop skills relating to consensual problem-solving, which is an important differential for a professional in a competitive scenario. In the author’s words, in the context of mediation:

“For significant changes to occur in qualitative terms, the mere existence of laws is insufficient: it is essential that the legal professional understands that one of his main functions is not only to represent and sponsor the client (as a lawyer, defender and counselor), but also to conceive the design of a new framework that gives rise to collaborative efforts.”

This means that we can discuss the rules that have been put in place and that updating legislation is unlikely to change a culture, but rather the preparation of people to do so. Specifically in the field of law, what needs to change is the lawyer’s philosophical map of the other party’s lack of good faith, which is not taught in law school.

This crisis of distrust of the law and its instruments must be combated by means that reinforce individuals’ confidence in the effective realization of their legitimate expectations, which can be developed as negotiation skills or what in the corporate world is classified as “soft skills”.

Negotiation techniques could not even be included in the legal system, as they are open and flexible, depending much more on the preparation and attention of the people involved than on a law, which cannot be acquired simply by studying the rules.

There are various negotiation strategies and many books on the subject to prepare you. In this study, we are sharing a strategy that is treated as a success story in a book on business management by Bazerman (2016), which is precisely the strengthening of trust and the sharing of information between the parties:

"In this case, only basic knowledge of arithmetic is needed to determine the result that maximizes the joint benefit. Unfortunately, this is much easier said than done. During negotiations, executives often tend to distrust the other side and believe that a strategy like this could hand over vital information (such as reserve prices). According to them, this could reduce their advantages in the distributive dimension of the negotiation. But if the goal is to maximize joint interests, sharing information is the ideal way for two organizations to analyze the task. This ensures that no dollar is left on the table, as the two sides discuss how best to divide up the resource pie. The benefit generated by the extra joint profits usually outweighs the distributive gain one side might get from employing more competitive tactics. In addition, sharing information helps to create a positive relationship between the two sides, something that is extremely necessary for an ongoing joint venture. In joint ventures or any intra-organizational negotiations, the exchange of information should be the central strategy”. - (emphasis added)

Thus, it is understood that the parties can exchange information, including confidential information, in order to both make a profit and have their expectations met, establishing a relationship of trust, before the declaration of will, regardless of laws, which can make the contract fairer.

Obviously, in the capitalist society in which we live, there is a need for minimum regulation, since for someone to trust another person is already to place themselves in a situation of hyposufficiency, however, it is thanks to trust that people move in search of a relationship with others. Ideally, it is necessary to seek harmony between the pragmatism of capitalist thinking, whose focus is known to be profit, law and pre-contractual trust.

Even so, if both parties distrust each other, they can also agree to an independent review of all financial and legal assessments.

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