Why You Need a Contract

3 minutes read

Legal jargon and convolution can form some of the most tedious and confusing parts of business and they both frequently occur in contracts. You, as a business owner, need to fully understand the contracts you are issuing and undertaking. They are an important part of any company’s dealings.

Legal Guidelines

One of the greatest advantages of a contract is they are able to exactly outline the law so you know if your business’s actions are legal or not. Quite often, they will be drawn up by a lawyer who specialises in that area of the law; resulting in an air-tight absolute that you know will keep you on the right side of the law. A good contract will make things completely black and white; leaving no room for grey areas.

Disputes and Problems

Contracts prove invaluable when trying to settle a dispute or problem. It will have certain procedures already outlined in it to protect both parties involved in the contract and these can be used to help reach an agreement. They may also form the basis of mediation between 2 disputing parties. If 1 party drops out, the contract can then be used to seek appropriate compensation.

They also protect you from misuse of intellectual property. If someone wishes to use something you have created, you can set strict guidelines to ensure your property is used correctly.


A contract is great for setting a timeline for a project. Through the contract, you are able to lay out multiple deadlines for different stages to ensure the project moves forward at a reasonable pace. Third parties may sometimes require access to your business; the contract provides a window of time for them to receive information and then return it with no damage to you or them. They can also be used to set in place certain time periods for employees, like a temporary work contract or a period of notice.


A verbal agreement may be a legally binding contract in Scotland, but it isn’t in other places. Having a contract provides certainty that the terms laid out in the document will actually be fulfilled. The contract isn’t just a collection point for all the agreements made during the negotiation; it acts as proof that certain discussions took place and were resolved. It is a great source of protection for everyone involved.


Finally, a contract helps to prove that you are a trustworthy business. A contract will forge a trusting bond between 2 parties far more firmly than any casual agreement will. It will confirm to both of you that your actions are protected during your time together.

Every business owner will have to handle contracts at some point in their career. If you feel like you don’t fully understand what is required when drawing up and maintaining a contract, make use of services like Contract Training by Devant so you are not left behind.

Contracts are at the heart of a company. It is up to you to ensure they are properly maintained.

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