Share contracts and their rationale: Lessons from marine fishing

Abstract

Most of the existing literature on share contracts is based explicitly or implicitly on agriculture, a sector in which share contracts are seldom dominant and apparently on the decline. Moreover, since agricultural activities have some rather special characteristics, the purpose of the present article is to analyse contractual choice and especially the choice of share contracts in a sector in which share contracts are dominant, namely fishing. In the process of explaining the dominance of share contracts in fishing, the article also explains (a) some heretofore neglected features of these share contracts, such as the way in which shares are calculated and the treatment of repair and maintenance expenditures, (b) the nature and extent of interlinked transactions, (c) the exceptional cases where share contracts are not used, and (d) the relevance of varying environmental conditions and especially those of poor developing countries to the nature of contracts in fishing, and to the differences therein between agriculture and fishing.