Final answer:
Contractual rights, tied to property rights, are crucial in ensuring parties can enter into agreements with legal recourse available if there's noncompliance, such as in employment contracts. Management agreements exemplify the use of contracts in business to define relationships and authorities. Trusts also rely on contracts for private asset transfer.
Step-by-step explanation:
Contractual rights are essential for the functionality of a society's economy as they are intimately tied to property rights. These rights enable individuals or entities to enter into binding agreements regarding the use of their property, with legal recourse available in cases of noncompliance. An employment contract between a surgeon and a patient serves as a cogent example where the surgeon expects to be remunerated for their services, and the legality of the contract ensures this transaction. Without enforceable contracts, there is a risk of non-payment, which deters people from engaging in future services and transactions, thereby hindering business operations and economic growth. Additionally, management agreements fulfil a similar purpose in the business realm by establishing the legal authority of managers over property operations, delineating their roles as agents and fiduciaries of the owner's assets.
Another key aspect tied to contracts is the establishment of a trust, which is an arrangement that enables a private transfer of assets to heirs, avoiding the public probate process. Thusly, contracts and trusts are pivotal in ensuring the smooth transfer and management of property, further underscoring the significance of legal systems that uphold property and contractual rights.