The purpose of any social contract based on the concept of popular sovereignty is to define the rights and obligations of citizens to the end of establishing rule of the people across all social spheres. Even though all democratic constitutions to a greater or lesser degree affirm the notion of popular sovereignty – perhaps paradoxically, the Soviet constitution was its most complete incarnation – in its various implementations, the people, although nominally sovereign, is systematically excluded from decision-making. In practice, the people are not sovereign. In fact, the real sovereigns are created by a coalition of the economic and political oligarchy, as a privileged caste, which – entirely cut off from the social life of the majority – appropriates power from the people. This text presents a plea for the establishment of a new social contract in Serbia, which would be formulated in such a way as to guarantee its initial postulate: the sovereignty of the people. Such a social contract should be established on three equally important fundamental principles: socio-economic, juridical and political equality, as well as on the twin principles of social freedom and solidarity. These components can be realized exclusively through the system of participatory democracy. The paper focuses on the concrete elaboration of the main guidelines of the social contract for Serbia in the 21^st century.