Contracts are essential in business to define responsibilities, establish obligations, and protect both parties. Contract law serves several important purposes in day-to-day business: 1) Contracts clearly describe each party's responsibilities; 2) Contracts are legally binding agreements that can be enforced if one party fails to fulfill their obligations; 3) Contracts establish timeframes and payment schedules for deliverables. Overall, contracts minimize disputes, build trust, and allow businesses to effectively manage client expectations.
Contracts are essential in business to define responsibilities, establish obligations, and protect both parties. Contract law serves several important purposes in day-to-day business: 1) Contracts clearly describe each party's responsibilities; 2) Contracts are legally binding agreements that can be enforced if one party fails to fulfill their obligations; 3) Contracts establish timeframes and payment schedules for deliverables. Overall, contracts minimize disputes, build trust, and allow businesses to effectively manage client expectations.
Original Title
Importance of contract law in our day to day business
Contracts are essential in business to define responsibilities, establish obligations, and protect both parties. Contract law serves several important purposes in day-to-day business: 1) Contracts clearly describe each party's responsibilities; 2) Contracts are legally binding agreements that can be enforced if one party fails to fulfill their obligations; 3) Contracts establish timeframes and payment schedules for deliverables. Overall, contracts minimize disputes, build trust, and allow businesses to effectively manage client expectations.
Contracts are essential in business to define responsibilities, establish obligations, and protect both parties. Contract law serves several important purposes in day-to-day business: 1) Contracts clearly describe each party's responsibilities; 2) Contracts are legally binding agreements that can be enforced if one party fails to fulfill their obligations; 3) Contracts establish timeframes and payment schedules for deliverables. Overall, contracts minimize disputes, build trust, and allow businesses to effectively manage client expectations.
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Assignment of Business Law and
Business Ethics
Submitted To: Zakir Abu Mohammad Syed Course Teacher EMBA
Submitted By: Badruddoza Shamim Nirjhor ID No. : 19-91484-3 Sec: A EMBA Importance of contract law in our day to day business
In the business world, it is said that opportunities do not just happen — you create them. In our daily life we have to do many businesses. For example, if you buy or sell a house, a contract is made and ‘exchanged’. When you start a job, you will probably have a contract of employment. When you go into a shop and buy something, you have entered into an agreement with the shopkeeper you agree that the shopkeeper will give you the goods and you will give him or her money. Each party to a business relationship brings to it a set of expectations with respect to what he or she will give and get. A contract is a useful tool for describing and defining the expectations of each party to a business relationship. For better understanding of the topic of the question, we need to discuss on the concept of contract shortly. A contract is an agreement between two or more parties, creating an obligation upon them to fulfill or not to fulfill some duties laid down specifically in the agreement.
The word “contract” means ‘an enforceable agreement’. Contract plays an integral role in our regular life. Generally, the contract may consistently being done between two different individuals or between two different organizations by exchanging promises. “Contract is an agreement between two parties which, on the first impression, appears to fulfill all the mandatory of a valid contract (Dobson, 1997). The term contract and agreement might be applied to refer a similar theme; as under general rule the term ‘contract’ can be different from the term ‘agreement’. All the contract will be agreement however not all agreement are decreased by the law. At some point, the gathering of agreement may not make legitimate relations because of the absence of thought of illicit motivation behind the understanding.
One of the most important things about the contract which people often misunderstand that in order to be a legal binding contract it should be in written complexion. Even an oral promise can be a legal or valid contract if fulfilled the following requisite.
The fundamentals of a contract are:
- Offer - Acceptance of the offer - Intention to create legal relations - Consideration - Certainty - Capacity - Free Consent For regulating our day to day business contract, the law must be needed. As a result, the Contract Act, 1872, which is the prime Contract Law in Bangladesh has been enacted. Contract law is important. Knowingly or unknowingly people enter into several contracts or binding agreements, in their day to day life, for instances, when they purchase goods or services etc. The importance of contract law is understood when two parties enter into an agreement. Contract law serves to protect your legal rights whenever a legal agreement is entered into between two parties. The contract itself creates an obligation on the parties to perform their part of the contract. Upon them not being able to perform their duties, the law itself provides remedies.
However, one needs to ensure that the contract created is a legal contract and entails all the essential requirements. Any contract entered into between the parties is done with the motive of securing their interests. Therefore, written contracts play a pivotal role in protecting the interests of the parties and ensuring that the non-breaching party does not have to suffer any economic loss.
The importance of Contract Law in our day to day business is as follows:
1. Contracts Describe Responsibility
Who is responsible for what? Contracts use language to be clear on what the responsibilities are of each party involved in a deal. Most likely, one party provides a service or a product in exchange for payment. There can also be clauses and sections determining when and how parties can terminate the relationship or change it in specific ways, such as restructuring payment schedules and so forth. 2. Contracts Are Binding Contracts bind parties to their stated responsibilities. In the event that one party does not honor a part of their agreement, they are in breach of the contract, which can be grounds for legal action.
3. Contracts Establish a Time Frame
Schedules and deadlines for the completion of specific projects are important elements of a contract. Accordingly, contracts can also establish a payment schedule mandating by what date payment for completion is to be rendered and setting exact requirements for what constitutes a completed project.
4. Contracts Describe Payment
Of all the reasons for a contract, the most important for many people is that it is an agreement that payment will be rendered for a product or service. Payment can be determined in a fee-for-service structure where a product or service is exchanged for a flat fee. Hourly rates or salaries can determine an ongoing fee structure whereby a party is paid at specific iterations such as biweekly, monthly or upon the completion of specific projects.
5. Contracts Provide Recourse
Ultimately, a contract is an insurance policy that helps to protect both parties. In the event that any part of a contract is breached, whether intentionally or unintentionally, either or both parties involved can take steps to solve the disparity and come up with a solution. In some cases, this may mean that one party takes legal actions against another to settle a dispute. Most contracts contain a governing law section that maintains that the contract is subject to the state law in which it was negotiated and signed, acknowledging that the law has final say over the contract's viability.
6. A contract prevents misunderstanding from arising
A written contract is usually produced during a sensitive business venture between parties entering into a business agreement. The main purpose of this formal written agreement is to give each concerned party the chance to read and have a clearer understanding of the terms or conditions, including the personal expectations of each party and what they have come to terms after a thorough discussion. The written contract will also be a reminder to each party that this business transaction should be taken seriously. 7. A contract guarantees confidentiality One of the ultimate benefits of having written contracts in business transactions is the opportunity to agree to confidentiality and non-disclosure provisions protecting sensitive information. As part of the agreement, the concerned parties are legally bound to hold in secrecy the transactions involved and the information shared among them, and the party that violates this confidentiality agreement would be held liable under the agreement.
8. A contract avoids expensive litigation proceedings
When a party to an agreement breaks the contract, the written agreement will be used as a general reference on what the parties have agreed and determine who is really at fault. Having a readily available written contract reduces the chances of bringing the issue to litigation proceedings, or even dragging litigation more than it may be necessary, which could be very costly and time-consuming.
9. A contract serves as an official record of the business agreement
A written contract is used as an official record establishing what the parties involved have agreed on. For instance, it provides guidance on the level of authority given to owners or managers in the business, completion date of any work contracted to a service provider, payment of work completed, or simply stating the terms on who or when to terminate a contract.
10. A contract helps to minimize disputes or problems
Whilst a contract won’t completely stop disputes or problems, a contract can help to minimize them. Should you have a dispute on your hands a contract can help to protect you in many different ways. It encourages your client to cooperate, but if this doesn’t happen a contract allows you to mediate to try and resolve the problem, rather than paying expensive legal fees. Of course if mediation fails then the contract is a legally enforceable document so it will support you with any legal action or debt recovery.
11. A contract helps you to give good customer service
Should a client have a problem, they can refer to the contract and it will give them all the information they need to try and resolve it. It will explain returns, refund and repair policies, warranties, intellectual property, and complaints procedure – all the things a client needs to know! By providing this information in a document that can be referred to, the client will feel they are getting a good service.
12. A contract helps to build trust and give peace of mind
By putting a legal framework in place you are showing clients that you care about them, as well as your business. A contract gives you and the client peace of mind because you know any transactions and work are protected. By providing this to clients you are allowing them to have trust in the business.
13. A contract allows you to manage expectations
When you communicate the terms and conditions of sale to a client you then have the ability to manage their expectations. A contract will communicate all the information they need to do business with you, so they understand what to expect. Managing your client’s expectations allows you to give them good service and encourage them to use your business again.
