Working in public: Our first Relational Development Agreement

Stories recently won the award for Governance Initiative of the Year at Property Week’s ESG Edge Awards.

We won the award for something we’ve been exploring and thinking about for a while: using relational contracts to structure development partnerships in a fairer, more resilient way.

In a previous blog, I wrote how I learnt about “formal-relational contracting” on the Leading Cross Sector Partnerships course and how we might move from theory to practice. We’re now doing exactly that.

Working with Aviva Capital Partners we have just exchanged on what we believe is the first relational development agreement in the UK. More on that specific deal to come soon.

From theory to a signed document

Over the past couple of years we’ve been asking a simple question:

What would a development deal look like if we designed the contract around the relationship partners actually want to have?

The use of a relational contract is our first serious attempt to answer that. Alongside a more conventional sale and funding agreements, we’ve created a Relational and Collaboration Agreement.

What’s different in practice?

If you skimmed the relational agreement you’d see plenty that looks normal: covenants, definitions, schedules, restrictions. This isn’t a fluffy memorandum of understanding.

The difference is where the emphasis lies. In short, we’ve tried to write down how good partners say they’ll behave, and then give that real contractual weight.

The agreement opens by setting out shared collaboration objectives – not as a marketing preamble, but as something the partners must actually use to guide decisions.

Rather than a vague aspiration, good faith is tied to specific behaviours: not circumventing the agreement, not “gaming” planning or title issues to gain leverage, and actively working to remove unfairness if it emerges.

The acid test of the relational contract is what a partner would do if one party ‘accidentally’ found themselves better off than was envisaged. Under most development agreements it would be chalked up as win for one party and a loss for another; the loser being a casualty of unforeseen events (or particular drafting). In our case, we are committed to treating (and being treated by) all parties fairly. If something unexpected and undrafted for happens the parties are committed to sharing in the spirit of the project, and not just to the letter of the contract.

Let’s be honest

We’re excited about this, but we’re not naïve. There are some real questions and challenges to grapple with when introducing any new initiative – and we want to name them upfront.

• “Isn’t this just more complexity and cost?”

  Yes, there is more work up front. Agreeing collaboration objectives, planning trackers and governance structures takes time and effort. Our view is that you either do that work at the start, together, or you do it in crisis mode later at far higher cost.

  
  

• “Can you really contract for behaviour?”

  A document won’t turn a bad actor into a good partner. If anything, relational contracts can be dangerous if they’re used as window-dressing by parties who don’t mean it. That’s why we’ve tried to tie behavioural commitments to practical mechanisms and to work only with partners whose values we trust.

  
  

• “Will funders be comfortable?”

  Some will, some won’t. We’ve spent a lot of time making sure the relational layer sits alongside – not instead of – the more conventional protections funders expect. Part of the experiment here is seeing how different capital providers respond, and adapt accordingly. In our first contract we are joined by Aviva Capital Partners which we think is as good as endorsement as you might find.

  
  

• “What happens when people change?”

  Leadership changes, boards change, political winds change. One of the drivers for writing this down is precisely to outlive the current cast of characters. But we won’t know how robust that is until the agreement has been tested over time.

We don’t have neat answers to all of this. That’s kind of the point.

Working in public: how we’ll share what happens next

One of the conditions we set ourselves for doing this at all was that we would share our learning, in real time, as far as commercial sensitivities allow.

We won’t always get this right. There will be compromises, tensions and probably a few moments when we wish we’d written something differently.

But if governance is going to be more than a paragraph in an ESG report, we need to be prepared to experiment in the open.

If you’re a land-owning charity, a local authority, a funder, an advisor, a lawyer, or a developer who’s curious about this approach – or sceptical of it – we’d love to talk. And if you just want to watch how this unfolds, stay tuned: we’ll be telling the story as we go.