IMPORTANCE OF VARIOUS CONTRACTS:WHY IS IT IMPORTANT FOR EVERY COMPANY, BUSINESS & EMPLOYER TO PREPARE WORKING CONTRACTS WITH ALL ITS EMPLOYEES OR PARTNERS? MERLYN LAW FIRM:
The basic norm of a contract is that it is a mutual agreement between two parties and it is legally binding which means that if a party breaches the contract, they will be liable under the eyes of the law for the breach committed.
A contract is legally enforceable when the conditions stipulated in the contract are in accordance with the contracts Act statutes of the particular country or jurisdiction.
In situations where, the conditions are not legally enforceable but there is a mutual agreement between two parties. A “memorandum of understanding” is more suited to ensure that any breach by the parties would lead to legal implications.
A contract should include the following:
- Full scope of work to be performed, including all deliverables.
- General timeline or, if possible, exact due dates for each milestone. Nothing that you discussed should be left out of the contract if you want it to be enforceable.
- Payment amounts and terms. How many days will the person have after delivery to remit that payment, and how will it be paid?
- The circumstances under which the contract can be terminated and how that will be handled. If dispute mediation becomes necessary, the contract should also outline how that will take place.
- If necessary, one or both parties may choose to include a noncompete or nondisclosure clause.
- Any terms related to failed obligations. If, for instance, payment isn’t remitted by a certain date, the contract should outline what the late payment fee will apply.
Protecting Both Parties:
Although having expectations in writing increases the odds of success, it also makes enforceability easier. Simply knowing it’s in writing can put pressure on all involved parties to meet their obligations on time. The service provider will probably even routinely check the contract to make sure the work is progressing as agreed.
If an issue arises, having the agreement in writing will make enforcement much easier. If the client decides to work with a different agency halfway through the project, the provider could take legal action to be paid for work performed. On the other hand, if the service provider performs poorly, the vendor will have legal protection against paying for the work.
Locking in Financial Agreements
If written properly, your contract will make sure the service provider receives payment in a timely manner. For big projects, this generally means multiple small payments as certain milestones are reached. A publisher buying an author’s book, for instance, will often issue one advance payment when the contract is signed and another when the completed manuscript is submitted.
However, a written contract may not always be enough to get paid on time. You’ll still have to issue invoices in many cases and reiterate the terms on that invoice. Make it as easy as possible for your client to pay, offering as many options as possible.
Closing the Contract
Hopefully, you’ll never have to take legal action based on the contract, which means the project will end and you’ll move on to the next project. Both parties should keep a copy of the contract on file for several years in case a later issue should arise. You’ll also have the template that you can tweak based on the lessons you’ve learned from previous projects.
Proof of Details
The prime purpose of creating a contract is related to the recording of details, which both parties have agreed with mutual consent. It provides a precise knowledge of the services provided by the third party or monetary expectations to be met by the person. These details will serve as legitimate proof and is very important in a contract.
Avoids Misunderstanding:
Misunderstanding is a common problem confronted in any business due to several reasons. To avoid such cases, drafting a contract is a mandate and, it is required for both parties to read the consented rules and abide by them. It has a large impact on the business as breaching the contract rules can lead to conflicts between the parties and thereby affect the business overall.
Provides Security:
A contract document plays a pivotal role in making the parties secure as it clearly specifies the tenure of the contract and set of responsibilities. Here, an employer is lawfully responsible to pay the committed salary on time and, the employee is responsible to perform his duties as designated. Any deviation is considered contract breaching and, either of them has the sole rights to take appropriate action.
The contract can act as legal evidence if any of the party files a case against the other at times of contract breaching.
Provides Confidentiality:
It includes an NDA (Non-disclosure agreement, which protects confidential information. According to this agreement, concerned parties are not entitled to reveal the business and, monetary transactions between them with any third person. In case of disclosure by either of them will be subjected to suffering as per contract rules, enforced by the law legally.
Acts as a Record of the Business:
A written contract is a relevant record stating the mutual consent of the proceedings listed in the agreement. It can be used for future reference and, comprises information regarding the stipulated delivery timeline of any work assigned as per contract. The tenure of the contract is also highlighted in the agreement, which provides more clarity regarding the termination detail. However, the contract may be terminated in the worst case if the other party is not fulfilling the rules mentioned in the contract or bypassing the terms.
Conclusion
The above reasons make contracts inevitable for small-scale businesses to keep their information secured and, protect them from crooked investors. Besides, it can safeguard employees when employers refuse to abide by the contract rules by giving false commitments to employees and misguiding them.
However, drafting a contract agreement, taking into account all these factors is a challenging and time-consuming process. So, it is advised to seek the help of an expert law attorney to help you through the process.
Strict legal action to be taken against people who breach the contract agreement. This, in turn, will reduce the future chances of people failing to follow the rules stated in the contract. Most contracts are written based on the governing law section, which depends on the state in which the contract was enforced and, the law acts over the contract’s viability.
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