Well renowned economists such as Smith and Walras have set the pace in economic analysis of contract law in the United Kingdom and all over the world. Their economic analysis is based on the operation of decentralized economies on the notions of the price and market system. Contract economics came to light in the late nineteenth century from a two-fold perspective which was the foundation of the Walrasian market theory. The Walrasian market theory had the following foundations:-
The above mentioned twofold foundations of the Walrasian market theory gives an explanation of the tremendous improvement of UK contract law and its main contribution to the essential reformation of all avenues of economic analysis. This ranges from the study of macroeconomic aggregates (for instance labor market) to that of interactions which are microeconomic.
Even though contract law is viewed from a simplistic perspective, there are four important issues which bring out the analytical power of economics:
 Collins, H. Regulating Contracts, (1999) London, Oxford University Press
 Crew, M.A. and Kleindorfer, P.R.“Price Caps and Revenue Caps: Incentives and Disincentives for Efficiency”, in M.A. Crew (ed.), Pricing and Regulatory Innovations under Increasing Competition, (1996) London, Kluwer Academic