Assignment of Business Law and

Business Ethics

Submitted To:
Zakir Abu Mohammad Syed
Course Teacher
EMBA

Submitted By:
Badruddoza Shamim Nirjhor
ID No. : 19-91484-3
Sec: A
EMBA
 Importance of contract law in our day to day business

In the business world, it is said that opportunities do not just happen — you create them. In our
daily life we have to do many businesses.
For example, if you buy or sell a house, a contract is made and ‘exchanged’. When you start a
job, you will probably have a contract of employment. When you go into a shop and buy
something, you have entered into an agreement with the shopkeeper you agree that the
shopkeeper will give you the goods and you will give him or her money.
Each party to a business relationship brings to it a set of expectations with respect to what he or
she will give and get. A contract is a useful tool for describing and defining the expectations of
each party to a business relationship. 
For better understanding of the topic of the question, we need to discuss on the concept of
contract shortly. A contract is an agreement between two or more parties, creating an obligation
upon them to fulfill or not to fulfill some duties laid down specifically in the agreement.

The word “contract” means ‘an enforceable agreement’. Contract plays an integral role in our
regular life. Generally, the contract may consistently being done between two different
individuals or between two different organizations by exchanging promises. “Contract is an
agreement between two parties which, on the first impression, appears to fulfill all the
mandatory of a valid contract (Dobson, 1997). The term contract and agreement might be
applied to refer a similar theme; as under general rule the term ‘contract’ can be different from
the term ‘agreement’. All the contract will be agreement however not all agreement are
decreased by the law. At some point, the gathering of agreement may not make legitimate
relations because of the absence of thought of illicit motivation behind the understanding.

One of the most important things about the contract which people often misunderstand that in
order to be a legal binding contract it should be in written complexion. Even an oral promise can
be a legal or valid contract if fulfilled the following requisite.

The fundamentals of a contract are:

- Offer
- Acceptance of the offer
- Intention to create legal relations
- Consideration
- Certainty
- Capacity
- Free Consent
For regulating our day to day business contract, the law must be needed. As a result, the Contract
Act, 1872, which is the prime Contract Law in Bangladesh has been enacted.
Contract law is important. Knowingly or unknowingly people enter into several contracts or
binding agreements, in their day to day life, for instances, when they purchase goods or services
etc.
The importance of contract law is understood when two parties enter into an agreement. Contract
law serves to protect your legal rights whenever a legal agreement is entered into between two
parties. The contract itself creates an obligation on the parties to perform their part of the
contract. Upon them not being able to perform their duties, the law itself provides remedies.

However, one needs to ensure that the contract created is a legal contract and entails all the
essential requirements. Any contract entered into between the parties is done with the motive of
securing their interests. Therefore, written contracts play a pivotal role in protecting the interests
of the parties and ensuring that the non-breaching party does not have to suffer any economic
loss.

The importance of Contract Law in our day to day business is as follows:

1. Contracts Describe Responsibility

Who is responsible for what? Contracts use language to be clear on what the
responsibilities are of each party involved in a deal. Most likely, one party provides a
service or a product in exchange for payment. There can also be clauses and sections
determining when and how parties can terminate the relationship or change it in specific
ways, such as restructuring payment schedules and so forth.
2. Contracts Are Binding
Contracts bind parties to their stated responsibilities. In the event that one party does not
honor a part of their agreement, they are in breach of the contract, which can be grounds
for legal action.

3. Contracts Establish a Time Frame

Schedules and deadlines for the completion of specific projects are important elements of
a contract. Accordingly, contracts can also establish a payment schedule mandating by
what date payment for completion is to be rendered and setting exact requirements for
what constitutes a completed project.

4. Contracts Describe Payment

Of all the reasons for a contract, the most important for many people is that it is an
agreement that payment will be rendered for a product or service. Payment can be
determined in a fee-for-service structure where a product or service is exchanged for a
flat fee. Hourly rates or salaries can determine an ongoing fee structure whereby a party
is paid at specific iterations such as biweekly, monthly or upon the completion of specific
projects.

5. Contracts Provide Recourse

Ultimately, a contract is an insurance policy that helps to protect both parties. In the event
that any part of a contract is breached, whether intentionally or unintentionally, either or
both parties involved can take steps to solve the disparity and come up with a solution. In
some cases, this may mean that one party takes legal actions against another to settle a
dispute. Most contracts contain a governing law section that maintains that the contract is
subject to the state law in which it was negotiated and signed, acknowledging that the law
has final say over the contract's viability.

6. A contract prevents misunderstanding from arising

A written contract is usually produced during a sensitive business venture between parties
entering into a business agreement. The main purpose of this formal written agreement is
to give each concerned party the chance to read and have a clearer understanding of the
terms or conditions, including the personal expectations of each party and what they have
come to terms after a thorough discussion. The written contract will also be a reminder to
each party that this business transaction should be taken seriously.
7. A contract guarantees confidentiality
One of the ultimate benefits of having written contracts in business transactions is the
opportunity to agree to confidentiality and non-disclosure provisions protecting sensitive
information. As part of the agreement, the concerned parties are legally bound to hold in
secrecy the transactions involved and the information shared among them, and the party
that violates this confidentiality agreement would be held liable under the agreement.

8. A contract avoids expensive litigation proceedings

 When a party to an agreement breaks the contract, the written agreement will be used as a
general reference on what the parties have agreed and determine who is really at fault.
Having a readily available written contract reduces the chances of bringing the issue to
litigation proceedings, or even dragging litigation more than it may be necessary, which
could be very costly and time-consuming.

9. A contract serves as an official record of the business agreement

A written contract is used as an official record establishing what the parties involved have
agreed on. For instance, it provides guidance on the level of authority given to owners or
managers in the business, completion date of any work contracted to a service provider,
payment of work completed, or simply stating the terms on who or when to terminate a
contract.

10. A contract helps to minimize disputes or problems

Whilst a contract won’t completely stop disputes or problems, a contract can help to
minimize them. Should you have a dispute on your hands a contract can help to protect
you in many different ways. It encourages your client to cooperate, but if this doesn’t
happen a contract allows you to mediate to try and resolve the problem, rather than
paying expensive legal fees. Of course if mediation fails then the contract is a legally
enforceable document so it will support you with any legal action or debt recovery.

11. A contract helps you to give good customer service

Should a client have a problem, they can refer to the contract and it will give them all the
information they need to try and resolve it. It will explain returns, refund and repair
policies, warranties, intellectual property, and complaints procedure – all the things a
client needs to know! By providing this information in a document that can be referred to,
the client will feel they are getting a good service.

12. A contract helps to build trust and give peace of mind

By putting a legal framework in place you are showing clients that you care about them,
as well as your business. A contract gives you and the client peace of mind because you
know any transactions and work are protected. By providing this to clients you are
allowing them to have trust in the business.

13. A contract allows you to manage expectations

When you communicate the terms and conditions of sale to a client you then have the
ability to manage their expectations. A contract will communicate all the information
they need to do business with you, so they understand what to expect. Managing your
client’s expectations allows you to give them good service and encourage them to use
your business again.