Contracts usually do not enjoy the most appealing of reputations. Many people regard contracts and legalese in general as boring, complex and vapid, yet a necessary hassle one has to go through in today’s spick-and-span society plastered with procedures and rules. In today’s blog post, we’ll put into the spotlight the main reasons why contracts are actually a very good creation – and totally indispensable if you want to protect your interests.
The ABC’s Of It
So what is a contract in the first place? Put simply, a contract is a written or spoken agreement regarding an obligation that has to be enforceable by law. Two entities set out mutual rights, responsibilities, and other rules towards each other, usually regarding employment, tenancy, sales, etc. In other words, a contract regulates their relationship by laying out the conditions of the relationship and the scope of the work. There are two predominant types of contracts:
A written contract provides more certainty to the involved parties, and thus holds much more weight than its verbal counterpart. From a legal perspective, spoken words are flimsy, and by putting an agreement in writing, you’re minimising the risk of being double-crossed or violating the terms yourself. It’s the best way to dodge misinterpretations and misunderstandings; and even if both parties have honest intentions, details of an agreement can easily get forgotten if they have not been jotted down.
In the case of a dispute, verbal contracts (even handshake agreements) could potentially be seen as valid and binding in the court. However, when it comes to your legal standing and peace of mind, it’s a very thin thread to hang by, and you should do it at your own risk.
Now that we’ve covered some of the very essentials, let’s get down to why you actually need contracts:
- Contracts ensure you obtain your rights
Not only does a contract state the expectations of both parties, it also has to foresee how possible problems and negative situations will be resolved. Quite understandably, the first and foremost reason why two parties choose to sign a contract is to obtain something. Specifically, a contract can provide guarantee you will get paid or receive another type of remuneration – or, if you’re on the opposite end of this agreement, that the party you’re giving money to will deliver from their side.
Think about employment contracts, for instance. As we’ve already established in our recent article on employment contracts, “an employment contract should in any case refer to the obligations of the conducted work, the payment amount and method, any specific requirements for both parties, and any property rights to the work produced by the employee.”
- Contracts ease your understanding of law
Laws can be convoluted and/or extremely extensive, time-consuming affairs, and if in the case of a legal misinterpretation, you can end up in quite a doozy. Here’s where the beauty of contracts becomes most evident: The legal principles contained therein are boiled down to a set of outlined rules; ones that are particular to your context and that you can easily abide by.
Have a competent legal professional draft a contract you can understand and honour, especially if this area of law in question is unknown or a bit murky to you. If there are some clauses or stipulations you don’t fully understand, make sure your lawyer puts it across for you before you sign it. It’s the best way to make sure all your legal ducks remain in row at all times.
- Contracts protect you and your property
Contracts have the power to protect you by limiting your liability, which is crucial should matters (God forbid, but you never know) suddenly start hitting the skids. Your business assets consist of many aspects, and property, both physical and intellectual, eat up a huge portion of that valuable cake. Intellectual property is a field that’s especially prone to different, often lacking interpretations, so make sure you protect it by a thoroughly drafted contract.
Another way you can use a contract to protect your business is to include a non-compete clause in it. This legal move either a) limits the type of services your ex employees could offer once they resign, and that’s based on your company’s unique product or services; or, b) provides you with the upper hand on the market by establishing with other individuals or businesses that they will not offer certain goods or services on the market (because they could harm your own commercial prospects).
Final Words: Why Contracts Are Essential
If you find yourself in need of some professional legal help, we’re here to jump in! Whether you need assistance with your contract or anything else of a legal nature, allow us to match you with the right legal specialist who will provide unparalleled service. Contact us to get a quote now by filling in a simple online form, or if you prefer, just give us a call.