An increasing number of companies, organizations, providers, and customers are interested in more circular and sustainable business models. This article, published in the prestigious Journal of Cleaner Production, features one of the more prominent models, functional sales, as viewed from a life cycle perspective and, in a novel way, its legal, environmental, and economic implications. So far, little has been published regarding these issues as they pertain to functional sales, making this article unique. Functional sales is in uncharted territory in the legal sphere, and the lack of legal regulation can only, to a certain extent, be overcome by a contract. A contract must consider the relationship to be long-term, and evaluation is important.

In this article, two different techniques for acquiring lighting representing product sales and functional sales are compared. It shows trade-off between environmental consequence and economic benefit and that qualitative aspects can be difficult to include in the contract and evaluation. The conclusion is that the ordinary purchase is supported by long-established rules and regulations so that such a legal transaction (acquisition) is quite conventional and uneventful. However, if the business model changes without a proper legal foundation, the parties of such contracts will find themselves in a legal wilderness, where the outcome of civil litigations is unpredictable. There are ways to circumvent these difficulties, which is demonstrated in this article, as well as the principal advantages of functional sales.

Read the full article here.