Commercial contracts are one of the most widely used categories of contracts. These are formal documents which are used to legally bind two parties together and ensure the protection of interests. Through a commercial contract, the involved parties are obliged to carry out certain tasks and responsibilities. No matter if the contracts are oral or written, the importance of a commercial contract remains intact.
Since commercial contracts are legal in nature, therefore the abiding of its terms becomes even more important. The importance of any commercial contract lies in the fact that such contracts protect the involved parties against any kind of breach or misconduct. These written documents are used to distribute certain responsibilities and duties to each of the party and see to the fact that they are fulfilled in the proper manner.
Another point why commercial contracts are so important is the fact that they ensure that the parties receive their payments on time. In such contracts, there is a statement which emphasises on the payment specifications. This statement makes it impossible for the parties to give or receive late or less payment in any scenario. The contract terminates if any such thing happens.
Commercial contracts are also useful for any third party such as the court or the judge who is meant to refer to the written document of this kind in case of dispute. If a person doesnt have a contract, then he cannot defend himself in any lawsuit. And in case a person loses a lawsuit, he might face a financial crunch.
Commercial contracts are used to lay down the expectations of the parties from the other party or parties. Thus these documents act as a tool to put forward thoughts and demands in a non forceful way. Infact such contracts are legal mechanisms which encourage co existence and harmony among different commercial organisations.
The business arena is filled with agreements, promises and contracts. Where sometimes, only oral contracts are sufficient, there also exists a chunk of the contracts which are written in nature. Business contracts are formal and most of the times legal in nature and thus the importance of living up to or abiding by the rules of a contract are huge. Infact business contracts are the tools through which a business organisations safeguards their resources and investments.
It is said that ‘better fences make better neighbours’. This statement is true in the business world and makes a lot of sense since without fences or contracts; one cannot fully trust another party and may have to face unwanted circumstances or betrayal. At some times, in long term business associations, people might think of a contract as a way which seems more like a formality and creates awkwardness but in reality making of a contract is more of a wise choice and the customers will definitely appreciate the adherence to the set rules.
Business contracts with relatively new customers or clients are a way to protect you against any fraud, late payments or late deliveries. In order to solidify your relationship, it is quite a vital thing to draft a contract and get it signed. In case of any violation of the terms of the contract, you can hold the other party on charges and get valid compensation. This way ensures safety and lets you conduct business without the hassle or worry of any kind.
When it comes to framing business contracts, one should not only pick the right contract up or get it framed from an expert but also go through the terms thoroughly. A business contract must be detailed as it is important to put all your points across so as to avoid any confusion during the length of the contract period.
Contracts are formal document that are made with an elaborate style and enough attention to details. These documents are generally enforceable by law and must be written in accordance to a format and correct methodology. This is the reason why experts are needed to draft contracts for most people. There are certain little points and things to be kept in mind while framing contracts.
The following points shall explain in detail the factors to be considered while framing contracts:
- Firstly it is important to mention the contract code/number etc in the very beginning of the contract since this number helps to categorise the particular contract.
- The next important thing to mention is the effective date or the date on which the contract is made or signed. The duration or term of the contract is another vital part of the contract. Most times it is advisable to give the termination date of the contract too.
- In any contract, it becomes quite necessary to use legal words such as ‘OWNER’,’LICENSOR’,’MANAGER’ etc depending upon the nature of the contract and the involved parties. The names of the parties and their titles must be preferably given together.
- The main body of the contract is one which consists of the terms, conditions, obligations, promises etc of the contract. This section can be divided into many sub categories.
- The first sub category deals with the financial aspect or the payment specifications. This part should be detailed in nature so as to avoid any confusion in the future.
- The certain details of the contract should be given point wise with enough explanation and detailing and this section of the contract can be quite lengthy and should be drafted with the help of a legal expert if possible.
- After giving all possible details, the involved parties as well as the witnesses must validate the contract by signing it at the end.
Contracts are important documents which are enforceable under law and are meant to bind two or more involved parties into certain rules and obligations which are in effect for a specified period of time. Contracts are of various kinds and each is important at a certain level and in some or the other way. Even oral contracts are important in their own right.
Most of the business and commercial transactions and deals are made on the basis of written contracts. These contracts are of extreme importance since they are used to safeguard the involved parties against any damage or misconduct by the unwanted methods. Contracts are used to lay down the basic responsibilities and duties. The parties involved are obliged to fulfil their respective roles or else immediate termination of the contract can take place.
Contracts can be formed even among different countries. Such contracts are obviously wide scaled and thus their importance is increased manifolds. The fact that the violation of the terms of the contracts can lead to legal implications makes them much more serious.
In the case of employment contracts, both the employer and the employee have their duties defined through the contract and are limited to a certain boundary which they cannot overstep in any condition. Contracts make it possible for an individual to perform his share of expected covenants. If there wasn’t any contract, it would be impossible to monitor the time period for which the employee has a right to work at the work place.
Sometimes, having a contract framed may also help to weed out the bad apples. This means that in case a party or client is reluctant to sign a contract, clearly shows that he has his faults or incapability to hide and therefore refuses to be bound by the conditions of the contract. This particular behaviour can help companies to distance themselves from such clients.
Contracts are documents which are used to bind two or more parties or entities by a set of terms and conditions. These documents are used in many spheres of life and are extremely useful for most organisations and individuals. Contracts safeguard a person’s or a party’s interest and makes him reassured of the fact that he shall be protected against damage or termination of contract by unwanted means.
There are many different types and kinds of contracts available. The following are a few categories of the same:
Contracts are classified into many types. The following is the contract type on the basis of creation.
- Express contract: Express contract is one where promise is made wither by written or spoken words.
- Implied contract: This kind of a contract is not made by written or spoken words; instead it is understood by the conduct of a person or his behaviour.
- Quasi contract: A contract where none of the parties are interested in forming a contract but the law demands them to do so.
Contracts which are divided on the basis of execution:
- Executed contract: A contract type in which both the involved parties have fulfilled their obligations and duties which were under the contract.
- Executory contract: It is a contract in which the parties are still to fulfil the duties entrusted upon them.
Contract on the basis of enforceability:
- Valid contract: A contract which is in complete accordance with the law of the state is called a valid contract
- Void contract: a contract which becomes valid when it is entered into but otherwise it is impossible to perform.
- Illegal contract: A Contract which is unlawful and goes against the state laws.
- Unenforceable contract: is a contract which is valid but cannot be enforced due to some difficulty or defect.