Contractarian philosophers tend to speak as if it is just natural for us to think of social structures according to the analogy of a binding contract between multiple parties. What they seem to be unaware of is that contract is a new enough an idea — relatively speaking — to make it anachronistic to conceive of a bargain struck in some primeval state of nature.
Social contract theory came into existence under certain historical and cultural conditions; before that time, philosophers did not think in terms of social contracts. Broadly speaking, there were two important historical threads running through the period in question that influenced the development of contractarian philosophical thinking.
First, social contract theory begins in 17th century England, coinciding with the emergence of that nation as a mercantile entity. With a rising merchant class, and the growing social prominence of trade, the notion of a contract became a more familiar thing. Confident that their audiences would know what they were talking about, philosophers began to talk about social contracts.
Second, again in 17th century England, the common law was developing a new branch of private law, which we now call the law of contract. It began with the old common law action of assumpsit (literally “he has undertaken”, from the Latin assumere, “to undertake”). Originally, assumpsit was an action for debt, while debt itself was seen as part of tort law. For example, if you borrowed money from me and didn’t repay due to deceit, it was that deceit which generated a liability for damages in tort. But later it came to be seen that the very promise to pay the debt back could itself form the basis of the action, regardless of deceit — after all, at the time you borrowed the money you might have had every intention to pay it back, without deceit even coming into it. Thus, under the form of action called assumpsit, the law came to concern itself with obligations generated by voluntary promises or undertakings, which is the basis of modern contract law.
Thus, I submit that in 17th century England, the novelty of the social and legal conception of contract came to influence philosophers’ thinking about the foundations of moral and political arrangements. But it was a far from natural way to think about them.
Even with regard to legal contract, the social contract analogy in certain respects breaks down. For example, it is well-established in law that a contract made under duress is not valid. This has especial relevance to Hobbes’ version of the social contract: if man’s only motivation for entering into the social contract was fear of violence and death, then is the contract binding? If the fear in the state of nature was sufficiently acute, forcing people into a bargain they otherwise would not have made, then it was made under duress and would be unenforceable at law.
Privity of Contract
Another way in which the contract analogy breaks down is with respect to the legal doctrine of privity of contract: an agreement made between A and B cannot be held to be binding on a third party C without C’s express consent. And yet, isn’t this exactly what happens where a social contract is held to be binding on future generations who were not parties to its first formation?
Interpretation of Terms
It often happens that the parties to a contract were actually — unbeknownst to them — not in agreement over the terms of the contract. They may have had differing ideas about what the agreement was supposed to achieve. In such cases, a court may invalidate a contract and grant restitution to one or more parties to return them to the position they were in before the contract was made.
Now, in the case of a social contract, can we honestly say that those who under its arrangements have ended up getting the short end of the stick, by winding up poor or otherwise disenfranchised, actually understood the implications of what they were getting themselves into? Maybe, but maybe not. If you entered into a contract that was supposed to guarantee your security and human flourishing, should you still be bound by it if that is not what you were getting after all? Courts decide this question in different ways according to the particular contract in question. But given that in this case the consequences are so dire and far-reaching, it is not unreasonable to suppose that a court would invalidate it.
In any case, the social contract was entered into so long ago (we assume) that nobody can really be said to be an expert on what its actual terms are. We have to interpret those terms as we go along. But if that’s the case, then why can’t we deliberate on just social arrangements without the device of a contract? In the absence of an actual explicit contract, we must negotiate anew, in which case, there is effectively no contract.
In a similar vein, rather than invalidate a contract, courts will sometimes fill in gaps through the imposition of implied terms where some element necessary for the carrying out of the contract is missing. We could say that in our social contract, there are many such gaps.
One common implied term is an assumption of good faith. A court will interpret what obligations would be generated if the parties entered into the contract in a spirit of good faith. Here, “good faith” implies honesty and lack of intent to deceive or withhold information vital to the other party’s free and informed consent to the contractual obligation.
This raises an interesting dilemma: if we are already assuming good faith on the part of the contractors, and if — as is undoubtedly the case — good faith presumes a fairly robust moral content, then it would seem that philosophers who use the device of a contract to ground morality are already smuggling morality in by the back door. If morality is needed to ground a contract that will ground morality, then… well, you get the picture. We can just as well cut out the middle man.
The terms of most contracts will give some indication of when the contract is to be considered discharged or rendered void, for example, upon completion of performance by the parties involved, or after a certain length of time has run out. If there isn’t such a limitation, courts may imply one that seems reasonable.
The social contract, on the other hand, has no such limitation. It would seem to be a rare instance where the contract is to remain valid indefinitely, from the moment I sign on to the day I die (not to mention that it continues to bind future generations).
Certain kinds of “contracts” are considered unenforceable at common law. Examples would be most gambling contracts, contracts demanding performance that is illegal, or a contract selling oneself into slavery (because certain rights are considered inalienable and cannot be waived). Now, imagine a contract whereby I give someone (or some body) the right to exercise extensive coercive powers over me, including restrictions on freedom of travel, imprisonment, and possibly even death. Such a contract would likely be unenforceable, and yet, this is exactly what a social contract involves.
For those who are curious, the above illustration is a reference to what is perhaps the most famous case in contract law, Carlill v. Carbolic Smoke Ball Company  1 QB 256.