Contract Law and why is it essential in a versatile global business environment
- BC ARYAN
- Apr 19, 2023
- 7 min read
Written by BC ARYAN Student , Symbiosis Law School , Pune
aryanbc01@gmail.com
Introduction
The Indian contract act, which was passed in 1872, makes it easier to make, carry out, and enforce legal agreements. This act focuses primarily on contract guidelines and principles. Contracts are used by businesses and consumers to buy or sell goods, license activities or products, create employment agreements, insurance contracts, and more. Contracts ensure that these transactions run without hiccups or misunderstandings. They make it possible for the parties signing the contract to do so with confidence. Contracts aid in ensuring that the terms of a transaction are understood by both parties. Therefore, contract law ultimately constitutes the core of the business.
In the business environment, change is inevitable and to be expected. The way businesses are run has also changed over the past few years as a result of technological advancement and modernization.
Every company, no matter how big or small, makes deals and agreements with customers, other businesses, and people both inside and outside the company. This emerges the requirement for certain regulations overseeing these arrangements and makes contract regulation vital for doing organizations easily and without clashes.
What is a contract, and why is it important?
Making an offer with all of the terms and conditions is the first step in making a contract. Assuming the party to whom the deal has been made acknowledges similar conditions and conditions, then the acknowledgement is finished. Both parties must be sober (not under the influence of drugs or alcohol when signing the contract), have no mental impairment, and neither should be under the age of 18. Giving some thought is another important part of making a contract. For instance, a seller might offer the buyer a home in exchange for some money as a consideration.
The following are the components that must be present for a contract to be valid:
Acceptance of an offer.
Legitimate consideration.
Full ability to enter an agreement.
A contract that is not null and void.
A contract in writing.
Contracts play a significant, everyday, and prevalent role in business and economic activity. The sale and purchase of services or goods, as well as their prices, are all subject to contract law in business transactions. The agreements are additionally engaged with contract regulation that relates to exchanges among organizations and clients.
Contract drafters and negotiators assist their clients in conducting business on favorable terms. Additionally, they assist their clients in comprehending the proposed contract language so that they can make the best decisions. Lawyers are the ones who assist their clients in successfully resolving contractual disputes. Contract lawyers assist individuals and businesses in carrying out transactions in a sound and beneficial manner at each stage.
Lawyers can help with contractual disputes by writing demand letters, contacting the other party to try to find a solution, or taking the case to court. Arbitration and mediation are used in some contract disputes. Contract law attorneys may perform some or all of these duties on their clients' behalf.
Additionally, contracts aid in resolving disputes, frustrations, unforeseen occurrences, and natural disasters.
Development of the Business Environment
The business environment encompasses all forces, both internal and external to the company, that have an impact on its operation. Political, economic, legal, technological, social, and other factors are included for consumption. It is dynamic and complex in nature. Some fundamental changes in the business environment have short-term effects, while others last for a long time.
As was mentioned earlier, there is no doubt that the business sector has experienced tremendous growth over the past few years. This growth in productivity has also made it easier to produce goods quickly and accurately in large quantities. The existing knowledge base is becoming obsolete in the current global and competitive business environment, which constantly calls for creativity and innovation. Process improvement advancements continue to benefit businesses. More and more businesses are offering individualized products and figuring out ways to stand out from the competition.
The term "globalization" didn't mean much fifty years ago, but it is now certainly in vogue everywhere. In addition to increasing competition, globalization and market opening have made it possible for businesses to operate in previously forbidden markets. The free movement of capital, goods, and services between nations has also been facilitated by globalization.
Mobile platforms for conducting business, cloud computing, technology that can handle a large volume of data, and so on are increasingly being utilized as a result of the technological boom. Companies can take advantage of these cutting-edge technologies and platforms to gain strategic advantage and stay ahead of the competition. Organizations need to chip away at new plans as to keep up with adaptability and convey client-fulfilling items and administrations. Additionally, these advancements facilitate the provision of customer service round-the-clock, a work-from-home environment, and the rapid completion of tasks, resulting in increased efficiency.
An ever-increasing number of organizations are coming on the internet-based foundation of retail to develop their business and to arrive at the greatest number of individuals. Few people were aware of Flipkart, Amazon, or the idea of online shopping 15 years ago. The most famous ott stage Netflix was likewise not known to individuals. However, the fact that these businesses have grown to such size over time and altered the shopping and entertainment landscape demonstrates the dynamic nature of the business environment.
Business process outsourcing is now the most popular option for businesses due to the expansion of business and management of large organizations. The businesses concentrate on their most important areas and outsource the tasks that aren't as important to the organization but are still necessary for its operation. Outsourcing aids businesses in lowering overhead costs, increasing productivity, shortening innovation cycles, encouraging the expansion of new markets, and improving the customer experience.
Businesses can enter into a variety of contracts, including express contracts, joint contracts, option contracts, and fixed-price contracts, in which the parties agree on a fixed price for a project. Other types of contracts include joint contracts, which involve multiple parties, express contracts, which provide specific terms for the contract, and fixed-price contracts.
Emerging issues The global reliance on technology has increased since the Covid 19 pandemic began. Companies are now able to process, store, and retrieve a huge amount of data at ever-dwindling costs thanks to the integration of information technology into the business environment. Additionally, due to the absence of a physical presence everywhere, digital signatures have emerged as the choice of all business organizations, resulting in a contentious and relevant contract law issue.
The petitioner had digitally signed annexures in Shree Balaji Transport Corporation v. Food Corporation of India, Panchkula and Others. However, the respondents' counsel argued that the tender's clause 8(c)(i) definition of "duly signed" only applied to physical signatures and not to digital signatures. The petitioner's bid was turned down for these reasons. The court, on the other hand, decided that there was no error and that it is reasonable to assume that the signature was a digital signature, as that term is defined in the IT Act. In light of the circumstances, the unlawful decision to reject the petitioner's application was overturned and set aside, and the bid shall be opened and proceed accordingly.
Even though courts still accept oral contracts, it is always preferable to sign them in writing to avoid future problems and disagreements. Oral contracts between businesses frequently result in future disagreements. As a result, it is preferable to draft contracts that are more specific, and every effort will be made to make all possibilities and occurrences clear in advance.
Because contract law plays such an important role in business, it's important for businesspeople to know a little bit about contracts and how they affect a company. The regulations connecting with data innovation are still during the time spent improvement as each new case brings new intricacies and various issues.
The agreements should be shaped for a lawful reason and with the common assent of both the equipped gatherings. It is against the law to enter into a contract unintentionally, fraudulently, or knowingly.
This case maybe refer to as Iridium India Telecom Limited v. Motorola Inc. Corporation. The plaintiff, in this place case, was persuaded by defendant No. 1 to set plenty of capital into the Iridium plan regardless of the defendant's information that it would never work. The plaintiff claims that the defendant. Since the wrong and ill-will is inclined be from the accused ., the person the one developed the Iridium scheme is responsible for damages. 1. The defendants' actionable misrepresentation and non-exposure prior to the agreements served as the action for the suit.
Copyright infringement by other businesses, idea theft, system hacking to steal sensitive information, and the production of products that are identical to their own are just a few of the challenges that businesses face when introducing novel products. For instance, copyright infringement could occur if a person uses someone else's song as background music in a music video or if a person downloads movies or songs from an unauthorized source, copyright infringement could occur.
In today's world, business organizations frequently violate contract terms. The parties have two options when a breach occurs: either they can seek mediation from a contract lawyer, or they can sue the party in breach and go to court. In most cases, compensatory damages are the remedy for breach of contract. The attorney or judge will decide how much the party who broke the contract must pay. Notwithstanding, in instances of more noteworthy breaks of agreement, the party, in some unacceptable, could likewise need to pay corrective harms or extra cash to make up for the aggravation and enduring of the violated party.
Conclusion
Despite the fact that contract breaches and violations are rising at the same rate as development, the law continues to evolve to deal with the cases. The business environment is unpredictable and dynamic. Globalization has had a significant impact on businesses all over the world, and business dealings between businesses in different nations have also grown. This has made agreements fundamental for organizations to have the option to work without a hitch and keep up with amicable business connections. An offer must be comprehensive, precise, final, and clear. Any scepticism or speculation is put to rest by drafting a contract for the business. Contract law establishes procedures for contract formation, execution, defences, and available remedies in the event of a contract breach. Additionally, there are a few additional contracts that are governed by distinct Acts. They are — Partnership Act, Sale of Goods Act, Negotiable Instruments Act, Insurance Act and so forth. These acts can be referred to as an extension of contract law because they are structured to properly detail separate areas. Therefore, it can be concluded that contract law is required in the ever-changing global business environment.
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