Some people mistakenly believe that a free enterprise system is based on the absence of any rules, but this is not true. The existence of laws and legal institutions—in particular, contract law— is important because it protects the freedom of both parties in an even more fundamental way by establishing the predictable groundwork necessary for economic transactions. Without this legal equality, people would know little about what they could expect when entering into an agreement with another business owner. When businesses were required legally to keep their agreements, it was clear what each party could expect when they entered into a transaction. This framework protected individuals' freedom by allowing them to enter into transactions without fear of unreasonable treatment after the fact.