Contract is defined as a promise enforceable by law . Contract is crucial to the market economy because it establishes rules for trade. Contracts outline the relationship between the parties involved in any business interaction. The third and final requirement is company law. Also referred to as business law, company law allows for the existence of large organized companies.
Company law allows large companies to own property just like the individual.
Through company law, a company is allowed to do the same transactions as an individual, but on a much larger scale. Company law also allows the sale of part of the company itself in the form of stocks or shares. The market economy is not without flaw. With the advent of large corporations, competition is rapidly being eliminated. Large corporate juggernauts are monopolizing their respective industries, which lead to anti-trust lawsuits, as well as many unhappy consumers.