Unfortunately widget="selection" don't support dinamic domain.

If you need widget selection then remove from domain non static value like partner_id:

<field name="contract_id" widget="selection" domain="[('state','=','draft')]" required="1"/>

If you need domain with dinamic value you have to remove widget="selection":

<field name="contract_id" domain="[('partner_id','=',partner_id),('state','=','draft')]" required="1"/>