Recently, interest in the correlation between 'contract' in transaction governance and 'trust' in relational governance mechanisms has been growing. This study focuses on issues related to the evolution of contract and inter-organisational trust dynamics in transaction governance and uses mixed research method to investigate sectors related to transaction governance in Taiwan's electronics industry. The study finds higher flexibility in contract implementation to be a promoter of trust between two parties in a relationship, thereby promoting project execution efficiency in the case of Taiwanese firms. Organisational management differs between the East and West; therefore, Western firms should understand how various contractual provisions can be used to accommodate different transactions when cooperating with Taiwanese electronics companies.