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The Importance of a Good Contract to a Deal

In the world today, contractual relationships have become an expression of personal liberty which is exercised by persons who are about to agree on a particular thing.

The power to formulate and enter into it cannot be taken from anyone. That is why a contract agreed upon without one party’s assent cannot be legally binding on the absent party. Although, like other civil liberties, the power to enter into a contractual relationship is limited by the corresponding rights held by other persons, as well as the state’s legitimate interest in applicable regulations.

Basically, a contract can be defined as an agreement between parties that creates mutual obligations enforceable by law. It is a promise that the law will recognize and enforce. All contracts are agreements, however, not all agreements are contracts. Thus, for an agreement to be deemed legally binding on the parties, it must contain certain elements prescribed by law. These elements include Offer, Acceptance, Consideration, Capacity, and an Intention to create legal relations.


Importance of a Good Contract

Recording Details

This is the provision of explicit information on the deal between two parties as well as the knowledge of the services provided by third parties and monetary expectations to be met by the parties.



Another benefit of a good contract is that it secures the duties and responsibilities of every party to the deal. It also sets out the tenure of the contract. For instance, in an agreement between an employer and his employee, the former is obligated to pay the salary on time and the latter is expected to perform his designated duties as at when due. Thus, failure to adhere to the duties stated in any deal by either of the parties can lead to the injured party taking appropriate actions in a bid to seek a remedy.



Every contract includes a Non-Disclosure Agreement (NDA) which binds both parties. Each party has not availed the privilege of disclosing the business transaction as well as the monetary expectations to any entity not privy to the contract.


Avoidance of Litigation

With a good contract, expensive litigation proceedings can be avoided in the case of breach by either party. A good contract ensures that unnecessary costs are not spent in endless litigations. It can be used as a reference to determine which party is at fault and the appropriate actions to be taken, which can, for instance, be a specific performance of the obligation by the party at fault or a monetary remedy equivalent to what was expected if such a deal had not been breached.


Relevant Record & Tenure

A contract contains the relevant documents where the proceedings in any deal are expressly stated with the mutual consent of the parties to such proceedings. Such documents can also be used for future reference.

It also stipulates the tenure of the contract, the timeline for the performance of the duties accorded to each party, and the appropriate actions that should be taken when there is a breach of duties.

At Dushyant’s Legal Services, we ensure that our contracts are drafted with clarity and expertise and words which will not lead to ambiguity, miscommunication, or grave legal injuries to our clients.