If one wishes to sell something, he must first own the item in question. Ownership enables individuals to trade private property. This trading of property is the basis for the market economy. The second requirement is contract. 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.