Secret repeated exchanges can be sustained purely by relationship value without contract law.

Evidence

In The Brothers Karamazov, Dmitry Karamazov tells the story of a lieutenant colonel who, as commander of a unit far from Moscow, has managed substantial sums of money on behalf of the army. Immediately after each periodic audit of his books, he takes the available funds to the merchant Trifonov, who soon returns them with a gift. In effect, both the lieutenant colonel and Trifonov have benefited from funds that would otherwise have lain idle, producing no benefit for anyone. Because it was highly irregular, theirs was a secret exchange that depended wholly on personal trustworthiness not backed by the law of contracts. — Russell Hardin, Trust and Trustworthiness, 60

Categorization

• XREF: Echoes Milgrom’s law-merchant analysis and the diamond bourse’s reputation systems — repeated interaction sustains cooperation without formal enforcement.
• SHARE: The recurring audit-and-loan scheme that profits both parties from idle army funds is a delightfully concrete little mechanism for anyone interested in informal institutions.