In The Role of Formal Contract Law and Enforcement in Economic Development, Michael Trebilcock and Jing Leng examine the importance of a formal institution of contract law to economic growth. Trebilcock and Leng find the evidence in support of the hypothesis that a formal contract institution promotes economic growth inconclusive, but they do not reject the hypothesis. Although the role of formal contract law in economic growth can be considered as a purely academic matter, the significance of the topic comes from its connection to the question whether developing countries should adopt or strengthen formal contract institutions to enhance growth.
Even if formal contract law does play an important role in development, however, that might not be sufficient to justify state enforcement of private agreements. The legitimacy of an institution of contract belongs to the domain of contract theory. This Essay considers whether contemporary theories of contract are relevant to legal systems without an established tradition of Western legal institutions. The Essay reviews contract theories of Peter Benson, Melvin Eisenberg, Charles Fried, James Gordley, Thomas Scanlon and Michael Trebilcock. The Essay concludes that even if a formal institution of contract does have the potential to promote growth, these contemporary theories tell us very little about the proper content, desirability, or legitimacy of contract law in societies other than those in which Western private law institutions are already well established.