Contract

Contract-Based Theories

Social contract theory is based on the most fundamental considerations for maintaining social order and harmony, that is, that individuals must generally agree to abstain from preying on each other and that, to ensure that this does not happen, rules and a mechanism to enforce them are required.

For business people, social contract theory has special implications for relationships among competitors and for transactions with less powerful or vulnerable buyers and sellers, especially those who are dependent on a marketer as either a customer or a supplier.

By implication, social contract theory demands obedience to laws and adherence to the provisions of business contracts.

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