by Janine A. Schindler (USA)

Doing business is about agreeing what you are going to do for your customer in agreement for their payment. An agreement is any understanding or arrangement reached between two or more parties. A contract is a specific type of agreement that, by its terms and elements, is legally binding and enforceable in a court of law. So why do we need contracts and agreements? Back in the “olden days,” there were few written business contracts. Many businesses and personal deals were done with a handshake. And if there was a problem, the two parties could take the issue to a court, who would hear it even if the contract was not put into writing.

Today, although a verbal contract is still legal, most contracts are in writing. Contracts are very detailed these days, and every effort is made to make all possibilities clear. In addition to being clear, a contract must meet certain criteria to make sure it can be enforceable. A contract that is enforceable can be taken to court for a decision on a disputed item. If a contract does not have the essential ingredients, it is not enforceable.

Most contracts never see a courtroom and they could easily be verbal unless there is a specific reason for the contract to be in writing. But when something goes wrong, a written contract protects both parties. If one party to a valid (enforceable) contract believes the other party has broken the contract (the legal term is “breached”) the party being harmed can bring a lawsuit against the party who it believes has breached the contract.

Source: iCN Issue 23 (Coaching Tools, Tips & Techniques); pages 98-100