The implementation of the NHS and Community Care Act, the greatly increased use of voluntary sector providers and the switch from grants to contracts form the background to this study. The article brings together two main themes in current social policy debate in the personal social services: regulation and quality assurance. Contracts are seen as increasingly significant forms of input, process and output regulation, although their impact depends upon their type and specificity and upon the capacity of purchasers to monitor contract compliance, and the sanctions available to them. Clarification of the conceptual framework is followed by the report of an empirical study of the position in a single large county. The results from this study are then discussed in the context of evidence from other parts of Britain and the United States. The main issues identified in this discussion are competition, consumer choice, user involvement, the dangers of excessive and inappropriate regulation, the importance of trust and risk, and the relationship of resources to quality.