incomplete contracts theory

Incomplete contracts theory suggests that agreements between parties often cannot specify every possible future situation due to complexity or uncertainty. As a result, some details are left unresolved, leading to potential disputes or the need for ongoing negotiations. This theory highlights the importance of flexible relationships, trust, and strategies to handle unforeseen circumstances, recognizing that perfectly complete contracts are rarely achievable. It helps explain why companies form long-term partnerships or include clauses to adapt over time instead of trying to anticipate every possible scenario upfront.