CONTRACTS - Harvard What is a contract

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Harvard - What is a Contract?
Contracts are everywhere not just some huge formal agreement between large corporations, whereone is going to buy the other, so on, although that's what something like that looks like. But, as a matter of fact, it's everywhere. You go through them, I don't know how many times in the course of a day. You go into a parking garage. They give you a stub. Now, that's a contract. They're going to look after your car, more or less. And you're going to pay them. You walk in to your dry cleaners, and you drop off your suit. And the person behind the desk gives you a receipt. Well, that's important, because that's how they're going to know which suit is yours. But that receipt is also a contract. And even if there wasn't a receipt, you're dropping it off there, and coming back a couple of days later and picking up the suit. Well, they expect to get paid, and you expect to pay them. That's a contract. You walk into a restaurant, you order the steak and chips and everything else. And then you get the check, and you pay it. You can't just say, well, that's very nice. Thank you very much for dinner. See you tomorrow. Understood between you was they're going to feed you and you're going to pay them. And so it goes. But it gets even less formal than that. I live in New England, and we have a lot of snow storms in the winter.
So what happens? It snows, and a bunch of local kids come knock on your door and say, sir, can we shovel out your driveway and your walkway and so on. How much?$20.OK. So they do it. And then they knock on the door, and they have a contract with you. You owe them $20.00. They didn't do that as a favor. Now it gets more complicated. You're out of town, and it snows. And while you're out of town, they come and they shovel out your driveway and do all that. And when you come back and they say $20, please-- well, do you have a contract for that or not? We'll find out later whether you do or not. And what if it snows the way it did a couple of years ago-- 18 inches? And they say, well, we had a lot of work to do, and they really did. This time you owe us $30. Do you owe them $30? All that is something we're going to try to understand. Now, you might ask, why do we have a MOOC on this? Why am I asking you to join me for really quite a number of sessions and quite a lot of work-- your work, my work on the subject of contracts? One thing I'm going to tell you, I'm not going to turn you into lawyers. I'm not going to teach you how to draft a contract or deal with a situation where somebody sues you or claims. That's not what I'm going to do. What I'm going to do is for you to understand what's going on as you go through your lives in a jungle, or maybe not a jungle-- a forest. It's not so unfriendly-- of contracts.
It's as if I were offering to teach you a course on the internal combustion engine. Now, this wouldn't be a course on how to fix your car when it breaks down or doesn't break down, but to know what's going on under the hood. So if your service station then tells you it's the transmission and that's going to cost you $1,500, you know what the transmission is and you know whether it kind of makes sense for that to cost you $1,500. In other words, what I'd like to do when you're through with this is for you to understand this part of your environment.
Coordination between Voluntary Parties
CHARLES FRIED: We should start way back. Here, look at this little clip here. That's a college eight. These are eight rowers. They're pretty practiced athletes, and they're making that very thin (fino/estreito) boat go very fast through the water. Now what would happen if one of them thought they weren't going fast enough, and so s/he speeded up? And another one maybe needed to scratch (coçar) his/her ear, and so s/he let go of his/her oars for a moment? The whole thing would break down, and the boat might even tip over (tombar). Because this is not like that, which is a famous painting of a single scull. That guy can slow down, speed up, and it's not a problem. What's the difference? This can go much faster, and it does that through coordination. Those eight rowers have to be coordinated. They've got to be going at the same speed. How do you get that? Well, there are different ways to get it. Here's one way that they used to get it back in the Roman times, when they would have 300 galley slaves. And you'd have this guy-- he was beating the drum (tambor) to give the rhythm-- and there'd be someone else there with a whip. But of course, that's exactly what this isn't. Our story is much more like-- in fact, I think it's exactly like-- the college eight than it is in the Roman galley. Because we're talking about coordinating the activities of maybe just one or two people, or a few people.
The people who are going to shovel out your driveway, for instance. Coordinating the activity between free men and women. Nobody's got a whip (chicote) to anybody here. And later on, we'll see what would happen if somebody says, I didn't really mean it, because they had a whip to me! We'll talk about that later. Because, for the time being-- and mainly, we're talking about coordination of free people who are getting together to do something. Look at this picture. It's a famous painting done in the 14th century in Siena. The people in Siena-- Siena was a republic, by the way-- the people in Siena, in their town hall, wanted a great painter, Ambrogio Lorenzetti, to picture what happens in their well-run city. And it was a well-run (bem gerido) city, very prosperous. And in this-- it's called Buon Governo, "Good Government." And you see all of these activities here. Well, they are all coordinated activities. You see those two men there? They seem to be engaging in some kind of a trade or something of that sort. Well, that requires money or credit, and that is a highly coordinated activity. And look at those ladies in front-- they're dancing. Well, you know, that dance is a little bit like the college eight. They've got to watch each other's steps. They've got to transmit. They've got to coordinate. It's like an orchestra. Or even better, this, a jazz group. How do those people in that jazz group somehow know that it's time to speed up (acelerar), or it's time to try that in B minor or something of that sort (desse tipo)? There's nobody there with a whip. It's a little bit more, much more, like the college eight. And there, the coordination takes place through subtle hints (dicas sutis) in the jazz group. It might just be a glance, it might just be a little gesturewhich outsiders don't even notice. Look again at that painting. There's another example. Up there, you see a couple of guys who are fixing the roof on a house. Well, again, coordination is the key.
Communication, Agreement, Understanding, and Trust
CHARLES FRIED: We've got coordination. And how do you get coordination? You get coordination through communication. I've been talking about that. The communication can be really pretty gross by that hortatory who's beating on the drum. But it can be by subtle clues (por pistas sutis), and that's what we're talking about. We're talking about voluntary coordination. Let's get inside the notion of coordination for a moment. What is inside coordination? Coordination depends on a number of things. There has to be communication, agreement, understanding. Different people who are playing in that jazz quartet have to understand what it is they're trying to do. It's not only that you have to understand what the other people you are coordinating with want. But you have to want to coordinate with them. You have to try to coordinate with them. And that means you have to trust. 
What is trust? A crucial notion that is going to underlie everything we're talking about. That's trust. You see? The guy who falls backwards (cai para trás), he is sure that there's somebody there to catch him. He is so sure that he's willing to risk (disposto a arriscar-se) getting badly injured. But trust is absolutely indispensable.It's indispensable in that little example,but it's indispensable in any coordinated activity. So what do we have? We've got understanding, and we've got agreement, which is a precursor of course to contract, and we've got trust. Just for fun, look at what the good citizens of Siena did to illustrate what happens if you don't have good government, mal governo. You see, you've got all kinds of people beating up on each other. The fields run to wrack and ruin. The place goes to hell. That's the opposite.
But underlying the good situation is agreement and trust and understanding. And of course, the most famous example of understanding is illustrated here in this famous painting by Pieter Bruegel. That's a painting of the Tower of Babel. I'm sure you all know the story of the Tower of Babel. Here were the people of Babel. They were going to build the biggest tower in the world,they were going to reach right up (para chegar até) to God. And that seemed just a bit much. But how were they stopped from doing that? It wasn't by a thunderbolt (raio). It wasn't by somebody coming up with whips and guns. No. What God did was he caused these people all to speak different languages. So they couldn't understand each other and when the understanding stopped, so did the coordination and so did the building project, and there you see it's half finished.
Coordination over time
Write about a time that trust and promise helped you to get something done that you wanted to accomplish over a long period of time (at least more than a day). Explain why trust and promise were essential to the achievement of your goal. One or two paragraphs is sufficient.
This exercise is also practice using this Open Response format, which we will use in several places in the course. This first question is for participation credit only.
Durante a minha infancia sempre fiz aulas de ballet classico, dos 6 aos 15 anos, e durante os periodos de competições em outros países ou cidades a confiança e a promessa sempre foram essenciais para achievement of my goals. Principalmente quando haviam apresentações em grupo onde eu dava minha promessa as minhas colegas de dança de que faria minha parte acreditando que elas também fariam a parte delas. 
Fica bastante claro a presença da confiança que tinhamos uma na outra de fazer nossa parte em cada dança, para que tivessemos uma perfeita sincronicidade de movimentos e assim ganhassemos o premio. E para isso cada uma se dedicava ao máximo sendo a sua promessa para com o grupo. 
During my childhood I always took classical ballet classes, from 6 to 15 years old, and during competitions in other countries or cities, trust and promise have always been essential for the achievement of my goals. Especially when there were group performances where I gave my promise to my dance colleagues that I would do my part believing that they would also do their part.
It is quite clear the presence of the trust that we had in each other to do our part in each dance, so that we would have a perfect synchronicity of movements and thus win the prize. And for that, each one dedicated themselves to the maximum being their promise to the group.
Trust
The rowers, builders, dancers, jazz musicians, the string quartet,well, you know, they all coordinate moment to moment. They act together harmoniously. And trade can be like that, too. In early times, and among children and strangers, trade (comércio) was just like that. You have all seen these wonderful imagined pictures of the Pilgrim fathers, newly-arrived, laying out their axes (machucados), and trinkets (bugigangas), and knives (facas), and the Native Americans bringing produce and fresh meat.
And they could trade, without even knowing each other's languages. Let's look at another example of this kind of trade, something a little bit more contemporary. Imagine two friends. Suppose that I am a really great sandal-maker (fabrincantes de sandálias). You just have to stretch your imaginations a little bit. I have five pairs of sandals, and you, my friend, have a pair of boots. We have an understanding. I want the boots, you want the sandals for your family. We can trade. This is a quite limited form of cooperation or collaboration. It is rightly called primitive. But human beings are planners, and they plan by thought, not just, as bears acquiring body fat as winter approaches, by instinct.
Humans can tell what they have in mind, and why they do it. So let's go back to the sandal example and complicate it a little bit. Suppose you don't have the boots yet. You only make your wonderful boots for the cold weather. You want my sandals now for your whole family. It's June. I am willing to swap (disposto a trocar) my five pairs of sandals, which I've just made, for one pair of boots. But you want the sandals now, and don't want to have to wait until October when you will have finished making the boots which we will trade for. They take a really long time to make, after all. They're very good. What a pity (que pena) if you lose a whole summer at the beach because you don't have the boots on hand yet to make the primitive swap.
In fact, you say you are even willing to throw in a couple of pairs of heavy socks with the boots if I will just give you the sandals now. By your having to wait until we can make the swap in real-time, like the Pilgrims and the Native Americans, we both experience what economists call a dead weight loss. You lose a whole season at the beach, and I lose the two pairs of socks. What we need to do is cooperate, to coordinate our activities, like the rowers in the eights, but this time, not simultaneously, but over time, quite a long stretch of time, my work in the winter for your work in the summer.
I have to believe that, come winter, the boots will be there and you will let me have them. Now, it's not enough for you to say you might have them for me then. You have to give me some assurance and I have to believe you. I have to trust you. Remember trust? Remember the stick figure falling over and being caught? I have to trust you. Trust is one of the things that make our world go around. It allows planning, and planning is coordination over time. It allows human activity to get off the ground. But how do we structure that trust? How do we build with it?
I'm not going to just turn the sandals over to you
as a gift and hope that, comes winter, you will be similarly generous.
At the very least, you have to know I need boots.
You have to know that.
But even that is not enough.
You have to make some kind of commitment.
You have to invoke trust, not just a hope that you will be generous or kind.
Come winter, you think of me and want me to be warm and dry.
The way people make that commitment, the way they make the world go round,
is to promise.
If you don't notice that I need boots in winter
or if you notice and don't care, even if I remind you, but in June,
I gave you all those sandals.
None of that is enough to allow me to say,
but I trusted you to give me the boots.
But if you promised, then I am justified in saying, but I trusted you.
So promising is this great human invention.
The wheel is an invention.
This is an invention.
Different kind of invention, but it is an invention.
We climb up to a higher level of interaction,
and it puts sandals on your family's feet in summer,
and boots and socks on my feet in winter,
because it leads us to trust each other.
And trust allows us to coordinate our activities,
not just like the rowers in the college eight, but over time.
We can plan, because we can know what to expect from each other,
not just from moment to moment, as with the primitive trade,
but over the long stretches of time.
From moment to moment, it's understanding
that allows us to work together.
What allows us to coordinate our activities over long periods of time
is trust.
And promises, commitments, are the agents of trust.
Promises are, in turn, of course, made up of speech,
and understanding they assume speech, and understanding I promise
is one of the things wesay to each other to make things happen.