Holmström and Hart were awarded the 2016 Nobel Economics Prize for their outstanding contributions to contract theory by the Royal Swedish Academy of Sciences. Contract theory aims at promoting cooperation among people with interest conflicts through the design of contracts. This paper first gives a brief account of academic lives and main works of the two masters of contract theory, then elaborates complete contract theory of Holmström, incomplete contract theory of Hart and their main contributions to contract theory, places emphasis on the solution to the conflicts in the process of cooperation through contract arrangement by contract theory, and finally demonstrates the value of contract theory by issues like concrete application of contract theory to daily life and the design of the state-owned enterprises reform plan, and the implication of contract theory for state governance system and the modernization of governance capability.