The social contract is a theory of morality.
There are a number of different varieties of social contract theories. The two main varieties are based on either:
- equality of physical power or bargaining power, that makes it mutually advantageous for people to accept moral rules that recognise and protect each other's interests; or
- equality of moral status, which makes each person's interests a matter of common and impartial concern.
Both brands of social contract theory hold that there is nothing inherently wrong with actions such as murder or stealing or telling lies. There are no "objective morals" in that sense. Morals are only what society decides they are. It is socially useful not to have other members of your society arbitrarily killing you or stealing from you or lying to you. It is to everybody's mutual benefit in the society to avoid murder and lying and stealing, so that people don't have to be constantly looking over their shoulders, protecting their property and distrusting the word of everybody else. And so, "society" agrees on a set of mutually useful standards of conduct. This is the social contract. Nothing is written down on paper, of course. This is an understanding is reached by a largely unspoken consensus.
The consensus involves an implicit bargaining process: each person wants the social contract to protect his own interests as much as possible while restricting him as little as possible. Ideally, of course, each person would like to be morally "allowed" to act unrestricted, while at the same time imposing morals restrictions on others to advance his own interests.
The two species of social contract theories differ in how the content of the social contract is determined, because the premises of equal physical strength and equal moral status lead to very different moral theories.