Abstract The desirability of using the private sector to deliver public services is widely debated internationally. Understanding the nature of contracts that initiate and govern such public–private partnerships, and the extent to which they can define the performance of private providers, is key in addressing the questions that underlie this debate. Such understanding has to be gained through better knowledge of all the influences upon contractual relationships. Environmental and institutional factors have been highlighted as one set of influences in need of more attention. This paper presents case studies of three contracts for primary care services in Southern Africa. It reports aspects of the institutional and environmental context in which they operate, and reflects on the nature of publicly financed primary care as a service to be contracted out. An urban-based private sector contract for a sub-set of primary care services was found to operate very differently from rural-based public sector contracts, which attempted to provide broader coverage. The latter contracts were more loosely defined and operated in a more relational manner. Important environmental influences on incomplete contractual relationships explored here are the nature of the market, scope of services, management capacity and involvement of a public purchaser. The paper illustrates some of the practical challenges for low- and middle-income countries in pursuing a policy of contracting with private providers for public primary care services, and particularly highlights the difficulties of deciding how to divide up responsibility between the public and private sectors and yet maintain a comprehensive service delivery system.