While law is a practical discipline, due to the many applications that it has in the real world, law can also be considered a theoretical discipline. Both aspects of it are necessary in order to develop a functioning code of law. Theory is necessary in law, as it guides the development of new laws that agree with the principles established in past laws. Knowing the theory behind laws can also help us understand the reasoning or "spirit" behind the law, helping us interpret it more accurately.
An example of the importance of theoretical law is the case of contract law. Contract law refers to the legality that surrounds the development of a contract between people. A contract is a legally binding agreement, usually involving goods, services, money or property. Contracts can be written down, or exist in an oral form. Theory is important when dealing with contract law because by understanding the theory of law, we are able to create contracts that are fairer, more effective and more standardized.