In this article the author demonstrates the theoretical and practical background of some of the most important issues surrounding the Private Finance Initiative (PFI) as part of the government’s attempt to institutionalise governance by contract. Article by Christopher Bovis (Professor of European Business Law, University of Central Lancashire) published in Amicus Curiae - Journal of the Institute of Advanced Legal Studies and its Society for Advanced Legal Studies. The Journal is produced by the Society for Advanced Legal Studies at the Institute of Advanced Legal Studies, University of London.