The folder IS the contract.
If it is not in the folder, it does not exist for the project.
Most teams manage AI work in chat windows and shared docs. Both decay. Chat history rolls off, threads fork, and the canonical version of any decision drifts within a week.
A folder does not decay. The state of the project is whatever the folder says it is. Anyone, human or agent, can open it tomorrow and know exactly where the work stands.