| The contract is the foundation of doing business. | | | | arrangements, of course. There are numerous |
| Does that sound too formal to you? Is a | | | | components of business and related activities that |
| handshake agreement good enough for many? | | | | come under the umbrella of contracts. |
| Well, even though it may not be as air tight as, | | | | If you want to outsource your activities to |
| say, a contractor agreement, a handshake deal is | | | | someone else, that's a contract. You hire people |
| still a contract. The moment two people agree to | | | | for a period of time, that's a contract. You hire |
| terms when it comes to the exchange of goods | | | | people to fix something in your office, that's a |
| and services for a price, they have entered into a | | | | contract. Almost any decision to form an |
| legal contract. It's why knowledge of contracts | | | | arrangement with someone else, especially when |
| and the issues involved should be important to all | | | | money is involved, can form the basis of a |
| people in business, and why knowing the | | | | contractual arrangement carrying with it all the |
| difference between a good and bad contract can | | | | duties and obligations of a legal contract. |
| protect your interests. | | | | Another way of putting it is this: If you're doing |
| In fact, knowing more about contracts is like | | | | business with anyone to any degree, there's a |
| knowing more about life and history in general. | | | | contract involved there somewhere. And if it |
| Contract law is certainly not the creation of a few | | | | could potentially impact you and your business, |
| thoughtful individuals, nor is it part of any kind of | | | | you better get it down on paper. Some contracts |
| grand design. Indeed, contract law has much of its | | | | may not need to be as formal as a contractor |
| roots in the common law foundation of American | | | | agreement, but the more specific a legal contract |
| society. | | | | it is, the better position you can be in to protect |
| That is, contract law is somewhat a textbook | | | | your interests and that of your business. |
| example of how common law developed in Britain | | | | Indeed, laying out as much specificity in the |
| and the United States. People engage in business | | | | contract, while keeping it simple, goes a long way |
| transactions. Eventually, some of these become | | | | towards creating the good legal contract. It should |
| sources of disputes between various parties. | | | | lay out things like the parties obligated to the |
| Some laws already on the books may cover the | | | | contract, the financial arrangements agreed upon, |
| dispute. Very often, they don't. So that's where a | | | | what circumstances would lead to the termination |
| court needs to step in to cover so-called tricky | | | | of the contract, what mechanisms can be used |
| cases and establish new laws. These are called | | | | to resolve disputes, and what jurisdiction applies |
| precedents, which are then carried over to similar | | | | to the terms of the contract. The more that's |
| cases in the future. | | | | outlined in the contract, while making it easy to |
| It's the establishment of these precedents | | | | understand for all parties involved, the less of a |
| alongside legislated law that forms the foundation | | | | chance that a court will even be needed to sort it |
| of common law in general, and contract law | | | | all out. |
| specifically. Although it's certainly not necessary to | | | | After all, one of the benefits of a good legal |
| do extensive research in case law to gain a | | | | contract is that it discourages people to resort to |
| better understanding of things like legal contracts | | | | the courts to try and settle disputes in their |
| and the contractor agreement; contacting those | | | | favor. If most applicable terms are laid out in a |
| specialists who do might be wise. They're called | | | | good contract, the temptation to try and score |
| lawyers. Alternatively, just knowing that contract | | | | through a lawsuit will be mitigated. No one wants |
| law isn't always written in stone should perhaps | | | | to waste time and resources disputing an air tight |
| make it more imperative that good contracts can | | | | contract. If the terms are laid out properly, and |
| cover your interests in as many situations as | | | | each party knows specifically what their |
| possible. | | | | obligations are, then further difficulties down the |
| It is the desire to avoid grey areas and matters | | | | road are that much more unlikely. |
| of interpretation that creates the need to form | | | | Perhaps nowhere is this more true than with |
| contracts to protect your interests. In other | | | | respect to the contractor agreement. Companies |
| words, a handshake can get you in trouble, since | | | | are hired to do projects of all sorts for all kinds of |
| the specifics of such a contract can be a matter | | | | clients. While it's great to answer the phone, learn |
| open to interpretation. What is less open to | | | | that someone wants to contract for your |
| interpretation is a legal contract or contractor | | | | services, and pay you a lot to do it, it really |
| agreement that specifically states the obligations | | | | doesn't hurt if you already have prepared a |
| of all parties of a contract. The more the contract | | | | contractor agreement that covers both your |
| clearly outlines these obligations, the better off all | | | | interests before getting started. It lets the client |
| parties will be, especially if there ends up being a | | | | know what kind of people they're hiring, while also |
| dispute. | | | | protecting you from somebody who plays loose |
| It's not just the simple exchange of goods and | | | | with the notion of what a business contract is. |
| services for a fee that are subject to contractual | | | | |