I think the bit highlighted is wrong Oaksoft.
A player needs to be registered to a club but doesn't actually NEED an extended contract.
Players want contracts to protect their earnings even if the fail in their chosen profession. Agents want contracts as it means they can convince players they can get them long term, lucrative deals.
Top clubs want contracts to protect the player continuity through a given period.
Smaller clubs want contracts to protect their investment in players.
It works and I personally get annoyed when we, as a club, develop a young player only to lose that player with little or no compensation for the investment, both financially and in coaching time.