This is a explaination of my opinion of feudal contracts, why I think they are flawed, and a couple of suggestions on how to make them better. If you have any tips to avoid any issue I raise please let me know too!
How feudal contracts work
Feudal contracts can be changed at any time by a vassal provided they balance the change with one positive and one negative. If they have even a weak hook on you they can ignore the negative change. Once this is done, further contract negotiations are blocked until both liege and vassal have died or replaced.
Why they are so abusable by AI
When you have a small to medium size realm with anything over 20ish vassals this means you have basically zero control over what the majority of your vassals contracts look like. Your one spymaster can't compete with your vassals' spymasters for getting a balance of hooks to be able to undo the negative changes they get on you, and unless you pin every one of your vassals and meticulously go in and rebalance their contracts/block them from changing it each time one of them dies, they'll end up with completely unreasonable contracts.
Why this is an issue
Having all contracts on default settings I virtually always the clear best option and the fact that the AI changes their contracts all the time because they can very easily, means that it hurts the player everytime they do change it, regardless of whether they have a hook on you or not. Further, and perhaps more importantly, this is a serious missed design opportunity when the effort has been made to create a supposedly fun system to interact with and it ends up just being a minigame to try and forget the system existed by setting everything to default wherever possible.
I stated having all contracts on Normal-Normal with no tickboxes is almost always the best option. The paragraph after this one is just a more detailed description of why I've come to this conclusion. If you agree already, you can skip it.
This gets very annoying when some vassals have massive negative opinion modifiers they've inflicted on themselves because they've used it to 'buy' some other bonus, and some giving you no tax at all. This would be fine if the contracts were actually balanced in terms of each stage up or down and the tickbox options having comparable effects but thats not the case at all. In terms of taxes, the negative opinion penalties are very rarely worth the pretty minor increases going up, however just going down from Normal to Low gives four times less tax, with only +5 opinion. For levies, their main use is as a deterrent for factions so you don't want to lower these particularly, but again the opinion malus for having it above normal will put them closer to joining factions than it prevents so isn't worth it. The tickbox options impose significant gameplay restrictions on you if you can't keep them under control, unless I was hard RPing, there's very little reason to use these. The special types of contract are useful in some situations but are considered neutral (Palatinate might be considered positive but haven't used it yet to check) so are not relevant in this discussion.
Suggestions
My suggestions for how to go about fixing this would start with balancing the steps up and down to be reasonably balanced in terms of the opinion bonuses/maluses being closer connected to the level of change of the resource, and the maximum bonus/malus at each end being closer together. This would go some way to making the contracts work interacting with. Only the special contracts seems reasonably balanced in this regard, they have situational usage but generally provide as many bonuses and negatives.
A second suggestion is to make contracts more difficult to interact with quite so regularly to stop vassals abusing them on a whim. I sincerely doubt a powerful duke could go up to their king after many decades of national peace without reason and say to their liege 'I'm gonna give you 4 times less money but don't worry you can have a few more peasant troops if you need them to make up for it.' I suggest changing a contract at all should require a weak hook, and to change it beneficially should require a strong hook. I feel this is a more accurate representation of the system anyway. The existing rule that they can only be changed once per character is good but that doesn't mean it should change once per character, yet since AI characters have such varied objectives and it costs them nothing to change it, they almost always do.
How feudal contracts work
Feudal contracts can be changed at any time by a vassal provided they balance the change with one positive and one negative. If they have even a weak hook on you they can ignore the negative change. Once this is done, further contract negotiations are blocked until both liege and vassal have died or replaced.
Why they are so abusable by AI
When you have a small to medium size realm with anything over 20ish vassals this means you have basically zero control over what the majority of your vassals contracts look like. Your one spymaster can't compete with your vassals' spymasters for getting a balance of hooks to be able to undo the negative changes they get on you, and unless you pin every one of your vassals and meticulously go in and rebalance their contracts/block them from changing it each time one of them dies, they'll end up with completely unreasonable contracts.
Why this is an issue
Having all contracts on default settings I virtually always the clear best option and the fact that the AI changes their contracts all the time because they can very easily, means that it hurts the player everytime they do change it, regardless of whether they have a hook on you or not. Further, and perhaps more importantly, this is a serious missed design opportunity when the effort has been made to create a supposedly fun system to interact with and it ends up just being a minigame to try and forget the system existed by setting everything to default wherever possible.
I stated having all contracts on Normal-Normal with no tickboxes is almost always the best option. The paragraph after this one is just a more detailed description of why I've come to this conclusion. If you agree already, you can skip it.
This gets very annoying when some vassals have massive negative opinion modifiers they've inflicted on themselves because they've used it to 'buy' some other bonus, and some giving you no tax at all. This would be fine if the contracts were actually balanced in terms of each stage up or down and the tickbox options having comparable effects but thats not the case at all. In terms of taxes, the negative opinion penalties are very rarely worth the pretty minor increases going up, however just going down from Normal to Low gives four times less tax, with only +5 opinion. For levies, their main use is as a deterrent for factions so you don't want to lower these particularly, but again the opinion malus for having it above normal will put them closer to joining factions than it prevents so isn't worth it. The tickbox options impose significant gameplay restrictions on you if you can't keep them under control, unless I was hard RPing, there's very little reason to use these. The special types of contract are useful in some situations but are considered neutral (Palatinate might be considered positive but haven't used it yet to check) so are not relevant in this discussion.
Suggestions
My suggestions for how to go about fixing this would start with balancing the steps up and down to be reasonably balanced in terms of the opinion bonuses/maluses being closer connected to the level of change of the resource, and the maximum bonus/malus at each end being closer together. This would go some way to making the contracts work interacting with. Only the special contracts seems reasonably balanced in this regard, they have situational usage but generally provide as many bonuses and negatives.
A second suggestion is to make contracts more difficult to interact with quite so regularly to stop vassals abusing them on a whim. I sincerely doubt a powerful duke could go up to their king after many decades of national peace without reason and say to their liege 'I'm gonna give you 4 times less money but don't worry you can have a few more peasant troops if you need them to make up for it.' I suggest changing a contract at all should require a weak hook, and to change it beneficially should require a strong hook. I feel this is a more accurate representation of the system anyway. The existing rule that they can only be changed once per character is good but that doesn't mean it should change once per character, yet since AI characters have such varied objectives and it costs them nothing to change it, they almost always do.
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