The main economic system that existed in medieval Europe was feudalism. The concept is difficult to define, however, as it refers to a general set of reciprocal legal and military obligations among European nobles and the people. It revolved around three main concepts: lords, vassals and fiefs.
A lord was a nobleman who owned land. A vassal was a person who received land, known as fief, from this lord. In exchange for the fief, the vassal would provide military service to the lord.
Feudalism was thus a contract, formed by the exchange of land tenure for military service. Overtime, however, this relationship became less tenable. A reason for this was the transformation of Europe's economy. While land had been the main source of wealth during the feudal period, by the thirteenth century, the economy was transitioning from a mostly agrarian system to a money-based one. A market economy had developed. Land continued to provide social status, but people (even wealthy nobles) started to look for more "liquid" assets, whether for luxury goods or to provide for wars. Additionally, the development of hired mercenaries and then national armies decreased the noble's need for vassals.
