Law of Contract: Its role in business transactions

Written By: Kanishka Sharma 

The term contract is interpreted as an arrangement between two or more parties, which is of a contractual (binding) nature or we can say that it is an agreement with legal enforceability which is said to be a contract. It specifies and describes the responsibilities and commitments of both the parties concerned. In each contract, the Offeror makes an offer to enter into a contract with the Offeree. Only the Offeror and the offeree make the contract.

Factors involved in a contract

For a contract to be executed there are conditions that must be fulfilled the following conditions are :

Agreement – There must be two parties to constitute a contract the one who proposes it and the other who accepts it.

Free consent – In this, the consent is said to be free without any error, misrepresentation, coercion pr anything other unreasonable force.

Competence and Consideration – It focuses on the ability of the contract for example they are of sound mind, attained the age of adulthood, and Consideration they must be ready to be paid for the transaction.

Role of contract in Business

The contract is a written agreement that is agreed by all the participants and is the basis for any profitable enterprise and Contract is there for the fulfillment of the goals and it shares a positive environment with the clients.

Contract management or administration is a technique applied to the management of contracts lawfully negotiated with clients, partners, or staff. Contract management means managing or adjusting the terms and conditions of the contracts and ensuring consistency with the rules as set out in the contract. Contracts guarantee a standard commercial practice, giving clarification to the specifications.

Factors involved in the business

In Business some of the factors of Contract become Important – Detailed proof of Information: The primary aim of the contract is to document the specifics decided by both sides through mutual consent. Prevention of  Misunderstanding and Miscommunication:  It is a common issue encountered in any company for a variety of reasons. Offers protection and Ensures Confidentiality: It provides protection to the parties and it points out the contract tenure and collection of obligations and it requires non – disclosure agreement (NDA) which covers sensitive information.

Business Transactions and its Implementations

Transacting business was easy when  Two people agreed to make a trade, and both parties honored their word. But in the 21st century, professionals are all too aware of the long history of deal-breaking and lawsuits that have taken place all around them. In business, contracts are important because they outline expectations for both parties, protect both parties if those expectations are not met, and lock in the price that will be paid for services.

Contract law is critical because it permeates our culture and without it, life as we knew it may not have happened. Consider this topic for a moment from the point of view of the business, nearly any deal it makes includes a contract. For example, purchasing raw materials, renting property, employing equipment, selling its goods or services, and using banking and similar processes to make or collect payments. Likewise, most customer purchases require the procurement of products or services facilitated by the deal.

As for companies, it is impossible to think of many purchases made by customers that are not of this type. Finally, from the point of view of government, since much of what they do stems from the intervention of the relevant Parliament, gradually the services they offer are privatized and provided in compliance with the contract. But due to previous reasons, the contract is used to replace the loss of confidence between the parties.

Conclusion

From the above points, contracts inevitably for companies to keep their details safe and to shield them from the crooked. It will shield workers where employers fail to abide by the terms of the contract by making misleading promises to employees and misguiding them. In addition, we maintain that the center of the analysis is the negotiating process, the contract, and its use.

Consequently, the contract itself has a significant effect on the use of the contract. A contract with broad operational content is used to manage the distribution processes of all sides, whereas a contract with considerable technical content tends to be used to monitor the output activities of the group. Relations between the parties have a clear effect on the implementation of the contract. The transactional relationship tends to lead to a distinct use of the deal, whereas the relational relationship leads to a non-differentiated use. However, drawing up a contract, taking all these considerations into account, is a difficult and time-consuming operation. It is also recommended to pursue the assistance of expert counsel.

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Keywords

Law of Contract, Business Contracts, Interpretation, Contract Law