In this talk, I will present the benchmark continuous-time models for contracting between a principal and an agent. Next, I will talk about the extension of the classical models to the case in which the agent controls not only the drift, but also the volatility vector of the output process. Mathematically, this requires results from the theory of second-order BSDE's. Then, I will show how to apply this methodology to finding the asset pricing equilibrium and optimal contracts in a market with delegated portfolio management.