Contracts are a substitute for social trust. Contracts allow transactions to happen where they wouldn’t otherwise and because parties don’t inherently trust each other to fulfill mutual promises. And transactions have a great value. They are a way to move property and services from a place of lower value to a place of higher value. Through this process we increase the overall value that society enjoys, also known as “social welfare.” I'll give you an example. Let's imagine a very small society where it's just two of us, just you and me. And I grow apples and you grow oranges. So I have 1000 apples, and I'm getting sick of eating apples, and you have 1000 oranges, and are getting pretty sick of eating oranges. So we agree that at our next harvest, you will trade me 100 of your oranges for 100 of my apples. Notice that we didn't create anything new, we both are growing 1,000 apples and 1,000 oranges. But now we've moved some of those apples and oranges to the party that values it more. Now because of this contract, because of this promise, we’re now going to both be better off because we have fruit salad instead of just eating one type of fruit. Now let's pull that up to a global economy. There may be a person in Bangalore who very much wants to spend his time doing computer programming. And there might be a person in San Francisco, who is very, very busy and has very little time, but would gladly pay for some help with some of their computer programming. That transaction allows both of these parties to have something that they value more - time for the one person, work for the other. Contract law enforces these types of promises that are based on a mutual exchange of value, where both parties are entering into agreements and making promises voluntarily. Because through this process, societal value increases overall.