I actually hope that the contract stuff wasn't retconned but everything that played off must have played off this way for a reason, for example.
Let's assume then that Gustang went to the administrator and said that he will battle traumerei and wants to be able to kill him. But they can't just void traumerei's contract like that. So Gustang made a deal and suggest that it could be done via the scales of judgement. Gustang would be willing to gamble his life. Let traumerei kill him and make the choice(repent or not). So Gustang dies, the scales activate, Traumerei gets to make his choice. If he repents, then Gustang stays dead and we move on. If however he doesn't, then Gustang gets revived and he will be able to "override"Traumerei's "contract" with the approval of the administrator for Traumerei to die, whether by his hand or the hand of some "vermin"(Like through chess game). If it's none of that, then the entire scale thing was pointless again.
The Family leaders having the contracts then would also help to explain why V would want to "leave" and "re-enter" the tower as an "irregular" free from the contracts again. I mentioned this before. Because if they could all kill each other the entire time, then it wouldn't make sense for V to "come back" as an "irregular" again in order to accomplish something which he could have accomplished in the first place.
But regardless one big issue is Siu's lack of properly explaining these things. Unless he'll finally wise up soon and give us a massive "lore dump" surrounding all of this stuff before the season ends, but I won't hold my breath.