We study enforcement of contracts in partnerships. In line with the widely applied and internalized principle of just deserts, we assume that a contract o¤ender who harms the other more su¤ers a more severe punishment. When this principle holds, the inuence of the e¢ ciency of the agreement on the incentives to abide by it crucially depends on whether actions are strategic complements or substitutes. With strategic substitutes, the principle of just deserts leads to a conict between Pareto e¢ ciency of the contract and the incentives to abide by it – the more e¢ cient the contract, the weaker the punishment and the incentives to abide by. The opposite is true when actions are strategic complements under speci…ed conditions. With su¢ ciently strong strategic complements, if contracts can improve the status quo, then a …rst-best agreement will be abided by. The results have implications for the literature on legal enforcement, and for those on pre-play negotiations in single-shot and repeated games.