What is contract theory

the study of how people and organizations construct and develop legal agreements. It analyzes how parties with conflicting interests build formal and informal contracts, even tenancy.

Contract theory is the study of how people and organizations construct and develop legal agreements. ... Contract theory draws upon principles of financial and economic behavior as different parties have different incentives to perform or not perform particular actions

Explanation:

Social contract theory, nearly as old as philosophy itself, is the view that persons' moral and/or political obligations are dependent upon a contract or agreement among them to form the society in which they live

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