Business transactions revolve around the law of contract The contract spells

Business transactions revolve around the law of

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that “pacts must be respected” or “contracts/agreements must be honoured”. Business transactions revolve around the law of contract. The contract spells out the nature of the business relationship and the obligations of each party to the business transaction they are involved in. The law of contract facilitates commercial activity by creating a measure of security and certainty in the business operations through binding agreements, which allow business enterprises to plan for the future and to enforce their commitments to each other . While many transactions are conducted on an informal or non-contractual basis, virtually any significant transaction will be based on a fairly detailed contract to which and by which the parties are bound both legally and ethically. Usually a contract is entered into once an 50
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agreement is reached. It is important to agree at the beginning of the negotiations that all agreements are reduced to writing before contracts are formalized in order to avoid disputes. Contracts are negotiated by the parties in good faith. It is generally accepted that commitments made will be strictly honoured to avoid disputes. The contract provides means for resolving disputes. If the parties to the contract cannot reach agreement, an arbitrator or other third party may be called on to interpret the contract. The contract is therefore the principal document that governs business relationship. It is central to all commercial activities. Its primary purpose is to specify the respective rights and obligations of the parties to an agreement and outline specific procedures or actions that must take place. In this way, the possibility of disputes arising between the parties is reduced. B: What is the law of contract? “The law of contract may be provisionally described as that branch of the law which determines the circumstances in which a promise shall be legally binding on the person making it”. (Anson) Business/commercial law is grounded in the law of contract. The law of contract is a set of rules governing the relationship, content and validity of an agreement between two or more persons (individuals, companies or other institution) regarding the sale of goods, provision of services or exchange of interests or ownership. Contract law not only governs what happens when the contract breaks down, but it also establishes what the terms of the contract are, in the event of a dispute. Goode notes that the primary function of the law of contract is to facilitate commercial transactions by providing a reasonable assurance that each party will be held to his undertaking. It is not concern with the actual value of the item being transacted. The sufficiency of inducement to transact is left to the parties. Contract Law is everywhere. It is with us everyday day. From the purchase of a newspaper in the morning to the purchase of lunch, petrol, books, dinner, cloths, land, cars, and other utilities together with employment, enrolment in school, university and any other commercial activity you may be involved in.
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