A contract is an agreement enforceable between parties. In the commercial environment, a contract provides security to the parties involved. The contract starts with an agreement and acceptance. Both parties provide consideration. They must have the intention to create a legal relationship & sign a written document or a contract for certain deals. The parties involved must be legally capable of entering the contract. They must enter into the contract by showing their consent. Lastly, the purpose of the contract must not be illegal. A contract makes it much easier for businesses to trade. Contract removes uncertainty in agreement and provides a remedy if an agreement is dishonored. Industries, trades, and commercial activities involve numerous numbers of contractual transactions daily. A contract protects businesses and buyers from getting cheated. If the terms of the contract are not clear or incomplete, in the eyes of the law, the contract cannot be fulfilled. With legal binding, both parties have security and remedy if one party fails to keep their part of the agreement.
Significance of Contract Law
In Daily Lives
We enter into contract almost every day of our lives. Whenever we go to a coffee shop for coffee, we provide money to the shop employee so that we can get the desired coffee in exchange for the money. We communicate to their posted offer to provide us coffee for a certain amount. As soon as we make the exchange, we enter into a contract as we fulfill the terms of the contract for that product. This is an executed contract where the duties are performed immediately. They have fulfilled the terms of the contract by providing coffee to the purchaser. If the coffee shop employee fails to provide coffee, the contract law will protect us by allowing us to take legal action. If the contract law didn’t exist, we wouldn’t be able to take any legal action if the agreement was dishonored, the terms of the offer may or may not exist, and the definiteness of the transaction would have been unstable (Why, n.d.). We could not make these daily transactions securely. People could easily cheat on another as they won’t be legally bound.
There are many more services such as the internet, gas & electricity bill, cable connection, etc., where we pay for these services. We actually form a contract with that where they offer us their service at a certain price. They offer us services and products, and we buy those. The contract law legally binds the service provider and the purchaser to the agreement. As contract law exists, this sort of daily transaction has been made trustworthy and stable. Without contract law, the service provider would not be punished if they don’t keep their promise. Contract law has created security in the exchange of service for money. If they don’t provide us the service they promised, legal actions may be taken against them. Contract law establishes order and stability in our daily lives.
Whenever we purchase a bus ticket to commute to a certain location, a contract is formed. The bus driver is legally obligated to provide me with their transportation service as they have accepted my money. If contract law didn’t exist, the ticket would have been of no legal value. There would be uncertainty whether the bus driver would honor his part of the agreement. If he does not, I will be at a loss and the law cannot compensate me for my loss.
Contract law is used in almost every day of lives during most of the general purchases. Contract law has ensured a stable & secure transaction between the sellers and purchaser by introducing a set of rules and restrictions that must be followed otherwise, legal action may be. Contract law provides us a remedy and leads us to the resources that we can use if one party in the contract dishonors
In Businesses
Contract law exists in various levels & operations in business. From the formation of a business to the offering of products & services, contract law ensures the agreements in the business are bound to the law. Sometimes business deals are made with a handshake. If there is any dispute among the parties, they can go to court, but the court would want to see a written document even though the verbal agreement may have been legal. Businesses make contracts so that one party cannot harm the other. If one party believes the other party has broken the contract then he can bring a lawsuit against the other party. He can turn to legal process or litigation to determine whether the contract has been broken or not.
Commercial contracts build a safe bridge between business and their suppliers. Businesses can enter into a commercial contract with their supplier to meet the demands of the buyers. The contract may have terms and conditions encompassing supply quote, price, delivery date, and other essential factors that may directly affect the business.
If two people open a new coffee shop in partnership, they will form a partnership agreement between them. They would have to agree to their stake in the company in the contract. The percentage of ownership, profit and loss division, authority and withdrawal conditions, almost everything may be included in the contract. The contract would outline the terms and conditions necessary to protect both sides (The, 2021). Contract law plays an essential role in employment. Employees have to sign a contract with their employer as a formality of acceptance of the job proposal from both parties. The employee will be able to exercise the employee rights and get the agreed job benefits. Contract law protects both the employee and the employer from any breach of the agreement. If a contract didn’t exist, there wouldn’t be any stability and order in the professional environment & organizations would fail to run smoothly.
Buy and Sale Perspective
Commercial law is a significant part of a business that involves the sale of goods and services. The buyer and the seller agree to a contract where it states the transfer of goods to the buyer for monetary consideration (Sale, 1979). Contract law binds the sellers and the buyers to a set of terms and conditions that includes the price, payment method, delivery date & location, etc. Any breach of the terms and conditions could lead to legal penalization. As a result, the contract protects both the buyer and the seller.
The Contract law lets the parties know what resources they have if any one of them fails to keep their agreement. This minimizes the overall risk of the trade and brings definiteness to the business. If any goods are destroyed when the contract is made, the contract will become void. If the delivery is late, the law will provide a remedy for the losses of the buyer. The condition and quality of the product have to match that of the contract’s consideration, otherwise, the contract would be void (The, 1930). As a result, a contract in the sale of goods protects both the buyer and seller.
Industries, trade, and commercial businesses that include the sale of products or services turn to contract law for protection. If there was no contract, businesses could cheat on buyers and vice versa. There would always be uncertainty and distrust. The economic system would fail and people would not be able to trade smoothly. Contract law has allowed the world to have a sense of security in a business.
Conclusion
We have been using contracts in our daily lives. In stores, coffee shops or during commuting using public transport, we are forming contracts every day. Businesses have been turning to commercial contracts to run a smooth business. Especially industry, trades, and commercial business go into contracts so that the investments and transaction are secure and provide a remedy if any of the parties involved breaches the agreement of the contract. Commercial contracts are usually written deeds that act as proof of the agreement. The Contract legally binds the parties to the agreement. Any disputes or problems in business can be solved in court through litigation because of contracts. Without a contract, the system in which we have been making daily transactions or business transactions would fail drastically. People would easily get cheated, and there would be no remedy to compensate the parties at the losing end. The terms and conditions make the deals that we make clear and stable and tell the parties involved what can be done and what cannot be done. With clear instructions at our hands, commercial transactions have become trustworthy and easy to maintain. Contract law plays an integral role in modern commercial law. Parties going into a contract must keep their part of the agreement, or legal actions may be taken against them. Contracts in commercial law has made it possible for businesses to make transaction safely and securely. Without contract law, transactions would not be possible, and the economic system of this capitalistic society would collapse. If there were no contract, trading and transaction would have never been possible.
Bibliography
Articles
Commercial Law (n.d.). Retrieved from https://www.law.ac.uk/employability/legal-practice-areas/commercial-law/
Kifelew, M. & Shiferaw, D. (2012, March 6). Historical development and Economic Analysis of contract law. Retrieved from https://www.abyssinialaw.com/study-on-line/item/418-historical-development-and-economic-analysis-of-contract-law
Sale of Goods Act (1979). Legislation.gov.uk. Retrieved from https://www.legislation.gov.uk/ukpga/1979/54/part/II/crossheading/contract-of-sale
The Sale of Goods Act (1930). minlaw.gov.bd. Retrieved from http://bdlaws.minlaw.gov.bd/act-details-150.html?lang=bn
WHY CONTRACT LAW IS IMPORTANT (n.d.). The lawyers & Jurists. Retrieved from https://www.lawyersnjurists.com/article/why-contract-law-is-important/
Books
Atiyah’s Introduction to the Law of Contract – P. S. Atiyah, Stephen A. Smith – Google Books. Retrieved from https://books.google.com.bd/books/about/Atiyah_s_Introduction_to_the_Law_of_Cont.html?id=biiLQgAACAAJ&redir_esc=y Textbook on Contract Law – Jill Poole – Google Books. Retrieved from https://books.google.com.bd/books/about/Textbook_on_Contract_Law.html?id=cOQmDAAAQBAJ&redir_esc=y