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Why do we need to bother with contracts?

From time-to-time our clients challenge all of the formality required by the Legal Department. We often take it for granted, but I recently had an execute complain to me and ask “Why do we even need a contract?” Let’s explore a bit on why contracts matter and why we should take them seriously.

“A verbal contract isn’t worth the paper it’s written on.”

Samuel Goldwyn

Establishing Clear Expectations

One of the most significant benefits of contracts is that they establish clear expectations between parties. When you enter into a contract, you agree to certain terms and conditions, such as the work that will be done, the timeline for completion, and the compensation that will be paid. These terms and conditions are legally binding and help to ensure that everyone involved understands what is expected of them.

By having a clear understanding of what is expected, you can avoid misunderstandings, disputes, and conflicts. This can save you time, money, and headaches in the long run.

Protecting Your Rights

Contracts also help to protect your rights. For example, if you are renting an apartment, the lease agreement will outline your rights as a tenant, such as the right to quiet enjoyment and the right to have repairs made in a timely manner. Similarly, if you are hiring a contractor, the contract will specify what work the contractor is responsible for and what happens if the work is not completed satisfactorily.

Without a contract, it can be difficult to enforce your rights if something goes wrong. By having a written agreement in place, you can protect yourself and ensure that your rights are respected.

Building Trust

Contracts are essential for building trust between parties. When you enter into a contract, you are essentially saying that you trust the other party to fulfill their obligations. This trust is based on the fact that both parties have agreed to the terms and conditions of the contract, and they are legally bound to uphold their end of the bargain.

By building trust through contracts, you can establish long-term relationships with clients, partners, and vendors. This can lead to repeat business, referrals, and other opportunities.

Ensuring Accountability

Finally, contracts are important for ensuring accountability. When you sign a contract, you are agreeing to be held accountable for your actions. This means that if you fail to meet the terms and conditions of the contract, you can be held liable for any damages or losses that result.

Contracts help to ensure that everyone involved is accountable for their actions, and they provide a framework for resolving disputes if something goes wrong. This can help to minimize the risks associated with doing business and ensure that everyone is held to the same standards.

In sum, contracts are a critical part of any business relationship. They establish clear expectations, protect your rights, build trust, and ensure accountability. Whether you are a business owner, a contractor, or a consumer, it is essential to take contracts seriously and ensure that they are carefully drafted and reviewed before signing. By doing so, you can protect yourself and ensure that your business relationships are based on trust and mutual understanding.

“A good contract is like a roadmap; it should guide you through the project, prevent problems, and lead to a successful outcome.”

Joseph Zawadzki
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