The value of a formal contract is recording agreements among all participants to ensure everyone understands what is expected. Obviously, a long written contract will make most players' eyes glaze over and kill the fun. Maybe just have a discussion about some things. If you have a widely fluctuating set of players coming and going, a written contract can help new players assimilate quickly.
A formal social contract covers all details of play. Specifically, it is an agreement to play a certain game, at a certain time and place, with certain people, in a certain way. In other words: what, when, where, who, why, and how.
What
- What game are we playing?
- What version of the rules?
- What house rules?
- Can house rules be introduced later? By what process?
When
- What is the game schedule? Weekly? Every other week? Monthly? Irregular?
- What are the exceptions to the schedule?
- What is considered "quorum" for a game? (Under what circumstances will you cancel a game?)
- What is the process for formally cancelling a game?
- How should players notify people if they cannot play? if they can play?
- What is the process for formally inserting an additional game outside of the normal schedule?
- How long do we play (per session)? Will that change often (extended games), or do we need to stop at a certain time?
- How long of commitment are you expecting? One game? Three games? A year? Forever?
- Is it cool to miss games? How often?
Where
- Where is the game hosted?
- Are hosting duties shared?
- What is the address of the place where we play? Got directions?
- Where do we park?
- What are the special rules of the house? (take off your shoes, don't let the cat out, etc.)
- What should people bring? (food, dice, books, miniatures, etc.)
- Will we eat during the game? Who brings the food? How is paying for delivery food handled?
Who
- Who is invited to play?
- Who is excluded from play?
- What is the process for inviting new members?
- What is the process for bringing a friend or significant other to a game?
- Are children or spectators or pets permitted as tag-alongs?
- What is the process for correcting poor player behavior?
- What is the process for expelling someone you don't like?
Why
- What is the point of play for this group?
- What is the general mood of play? (fun, serious, dark, etc.)
- What is the general theme of play? are there any special tropes?
- Is it okay for players (including the GM) to be competitive with each other? (up to killing each other's characters?)
- Are there any limits about game content ("lines and veils")?
How
- How do players create characters?
- How do players advance characters?
- What level of playing "in role" is expected of all players? What is too little? Too much?
- What is the expectation around character death? Under what circumstances can it happen or not happen?
- If a character dies, how does the player replace it?
- How do players integrate characters into the setting?
- How do players integrate characters into the game's situation or existing character group?
- What kind of play behavior is considered annoying?
Also take a look at Chris Chinn's Same Page Tool.
Some questions to answer in your social contract:
Can my character die without my consent? In D&D (and most action-based games) the default answer is 'yes'. Subquestions to ask: Will I get a hint that I'm in serious danger? (In 4e you usually won't need one... it'll be obvious that you're low on surges and survivability.) How likely is this? (Players in my games know that I will kill characters, but it hasn't actually happened more than a couple of times in the last 10 years. The possibility is enough.)
Can my character die as a result of a single failure? Are there effects which kill or disable you at once if you fail a save, regardless of your state of health otherwise? In D&D 1 the answer was 'very much yes' and each edition since has been less so - a very good thing IMO. 3e in particular made a deliberate effort to reduce this, 4e more so - so in 4e you can say 'no' with no real change.
Can my character die as a result of another PCs actions? D&D mechanics assume a social contract in which the group are all on the same side, and in 4e this assumption is very strong. But good stuff can be done with characters that are mostly on the same side; conflicting goals -> character development -> entertainment. So: Might another PC abandon the group during a fight?
In particular, especially in D&D, cover can other players kill my character? as an entirely different question from whether the game world might. D&D 4e assumes 'No' as a default here, and 3e assumes 'very unlikely'.
[Edit/added, thanks to Valadil:]
Can my character die when I'm not present? If a player can't make it to the game, does their character vanish, or get played by other players, or by the GM? It's demoralizing to have a character killed or permanently damaged when you're not there. (Our group uses: GM tries not to kill the character when the player isn't there, but only if players refrain from using the PC as invulnerable point man... PC actions are by group consensus, but the PC does nothing especially heroic or dangerous. Basically, a no-score draw.)
Can my character be resurrected once dead? In D&D the default answer is 'yes, at a cost', if you're high enough level. In 4e the default answer is 'yes, at a not-high cost', especially in LFR. (Look at these rules; in a home campaign they have implications for the game world. We play LFR adventures... but the LFR resurrection rules seem too cheap to us; we multiply all costs by 10.)
Do the rest of the group have to try and resurrect me? In D&D, a regular party might even have in in-game contract for this one. Be sure it specifies who pays!
At what level does my replacement character join the group? (Our long-standing D&D and Star Wars answer has been 'at the bottom of the level below your previous character's level, plus some bonus xp based on how you roleplayed the death scene'. Another common answer is 'Same level as the lowest-level character in the group'.)
What non-base abilities/equipment can my new character have? In D&D in particular, magical items are the issue. 3e and 4e assume a certain level of magical item power for any given level of character; al cash value by level can be an acceptable guideline but not a dramatically brilliant one. In D&D for mage characters, you also need to consider 'How many spells does a new wizard know?' (in 3e) or 'How many rituals do I have?' (in 4e).
Adventurers being adventurers, and depending on your group's play style, you may also need to ask if my character dies, do the party loot the body for useful magic? (GMing note: Having an unknown relative show up and lay claim to the deceased PCs possessions is a fun way to cause trouble for item-oriented groups... especially if they had a mission-critical item at the time.)
The Living Forgotten Realms rules cover all of this well and are worth a look, but don't use them as a model for a regular group. They're designed to handle a situation in which you're playing drop-in convention games with random strangers and want the GM to recognise existing characters. They do a decent job of examining the kind of question that can come up.
Best Answer
Well the thing is it's not a gaming specific term; there's plenty of definitions outside Ron's Big Model specific one.
Social Contract Definition
The term "Social Contract" (or "social compact") got its start from Rousseau and those types who defined it as "An agreement among the members of an organized society or between the governed and the government defining and limiting the rights and duties of each." (Wikipedia)
It has since been usefully expanded into meaning "An implicit agreement among the members of a society to cooperate for social benefits," which applies in circumstances where there's not really a government/goverened split (though a strong GM role might qualify...) A RPG group is a small society of its own, and has rules - explicit, implicit, assumed, badly assumed - about how people should act. That is its "social contract."
Example components of the social contract are: Do people drink at the gaming table? Is giving other players tactical advice OK? Are PCs killed without a second thought? Is GM fudging cool or not? All these are things not usually defined in the games themselves, they are part of the 'social contract' of the people playing the game. It can be expectations about behavior in play (no PvP!) and out of play (You miss the game, you get no XP!).
The Gaming Social Contract In Practice
Some groups get explicit about "defining the social contract." This can be helpful to have people on the same page so that expectations aren't violated when their PC dies or someone pops open a beer at the table. It can also be wonky and pointless if taken to extremes and can be a poor man's attempt to impose behavior they want on other players.
The term social contract is grandiose; there is a social contract even if there's totally not one defined; in most places one would assume someone wouldn't show up to a game butt naked - that's part of our culture's social contract, not unique to the game table really. Similarly most people don't feel a need to write down "don't cheat on die rolls," it's assumed.
Social contracts in gaming groups generally only need additional definition when there's an issue that splits/troubles the group and you want to get everyone to have common expectations. "We start on time even if some people are late." Some things can and should vary - one GM may be casual-kill and another may be PC-entitlement; of course people determine this by inspection themselves but you can avoid some conflict by being explicit before it comes up.
It does beg the question of who has the authority to set the social contract. The majority of the group? The GM? Whoever is the most charismatic and talks the loudest? When you attempt to create an explicit social contract to prescribe rather than describe the group's metaphor you can run into some problems.