Because contracts can't specify everything, governance matters.
Hart and Holmström's Nobel work. Since no contract can specify every contingency, what matters is who holds the residual right to decide — which is why ownership matters at all.
In practice
- A software contract cannot enumerate every defect, so what matters is who decides when something counts as a defect.
- A joint venture's value turns on which partner controls the decisions the agreement did not anticipate.