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The definition of property rights, as an interactive process between the parties concerned to establish or change a contract of rights, is without doubt an important social activity in the history of economic life. Ever since the mid 1990s, certain developments from the transformation of township collective enterprises indicate that community collective property rights mainly comprise a property right that is socially contractual instead of market contractual. This kind of social contract is neither some kind of consciously designed system nor a natural expression of social relations. Instead, it is the outcome of relations and specific coordinated actions that represents a harmonious social order. Under an imperfect market contract, it might be possible to handle and solve cooperation issues and property rights conflicts within a community in an informal manner and therefore this could play a role in defining and maintaining the order of community property rights. However when there are drastic changes in the institutional environment, such a role for the social contract is very limited. Today, when institutional transformations still need to be backed by administrative force, severels' harmful consequences for sustainable community development would result if the informal rules of social contract were merely replaced with some institutional design that did not take into consideration the extension or replacement of the social contract. [ABSTRACT FROM AUTHOR]