Question

For this discussion topic, I'm asking an open-ended question as to whether you feel contract law, and by extension, contracts, are essential to businesses.  

If you agree that contracts are essential to business, explain why you feel that way and provide at least two examples of why you feel contracts are essential.

If you feel contract law, and by extension contracts, are not essential, explain your position and provide at least two examples that support your position.

Answer 1

Contract law (and contracts) are very essential for businesses. This is because they are the documents which ultimately guide the behaviors of both the parties. If there were no law in place binding both the parties, each would try to benefit on the expense of the other. It is similar to a situation in which we are trying to travel on roads without any traffic rules. If everyone does what they feel like doing, it would result in total chaos. To take examples from business, we can imagine a situation in which the buyer has fixed a contract with the seller for an entire year to buy goods at a fixed rate. If now in the middle of the year, the seller increases the price, the buyer would have nowhere to go to buy the products he needs. This would also result in reduced trust between the two parties. Another example can be when the quality of the products supplied are not up to the mark and as discussed earlier. This can result in the buyer feeling cheated. Similar examples can be given from the perspective of the seller as well when the buyer doesn't pay him/her on time.