C. Making a business contract
You will probably have to draw up and sign many contracts as part of your company's daily business transactions. Some of the most common business contracts include:
- sale and purchase agreements for premises;
- lease/tenancy agreements for premises;
- hire-purchase or lease agreements for equipment;
- employment contracts;
- insurance contracts;
- sales contracts with customers;
- procurement contracts with suppliers;
- financing contracts (including loan agreements, mortgages and guarantees).
A contract can be made orally or in writing. In practice, many consumer contracts are made orally (see Consumer Complaints), but some contracts are required by law to be made in writing. Examples of such contracts include cheques, insurance policies, the transfer of shares of registered companies, hire-purchase agreements, leases and agreements for the sale and purchase of real estate.
For business transactions, it is always preferable that contracts are entered into in written form. If the contract involves a substantial amount of money, you should consult a lawyer before signing.
- What are the basic requirements for making a valid contract?
- Other than the essential elements as mentioned on question 1, what are the other important matters that the parties should note when making a contract?
- If one party breaches a contract term, what can the other party do? What are the possible liabilities of the defaulting party?
- To avoid certain liabilities, some business people insert exemption or exclusion clauses into their contracts. Are these contract terms valid under the law?
- What if I am misrepresented (misled) by others in entering into a contract. Will the law help me to discharge the contract or claim compensation?
- What if I need to use a middleman (such as an agent) to act on my behalf to negotiate for business or enter into contracts with others. What should I be aware of in such kinds of business dealings?