An article from eHow.com defines contracts as legally binding agreements between two or more parties. The parties that enter into a contract can be individuals, businesses, organizations or agencies. A contract outlines what must or what must not take place between the two parties that enter into the agreement in exchange for something of value. A contract is a formal promise. So why are they important?
Ever since man began trading things between themselves, he also learned to give a guarantee for his wares, services, or whatever it is he is offering the other party. It was a solemn promise that his goods will meet or exceed the expectations of his buyer. In the early days, this was done verbally and with a handshake. A code of honor was practiced during that time and it was considered a great crime to break your promise. But things have changed a lot since those days and we now find ourselves wary of con men and thieves. Honor is something rarely practiced nowadays and so that's where we find the importance of knowing what contracts are and when you should have one done.
Contracts, as the article described, are legally binding. It means whatever is written there should be followed by both parties to the letter and is protected by the law. Protection by the law means, every word inscribed in the contract is final, truthful, and amenable to both parties and are submitted to all prevailing rules and laws of the land. It's a bit confusing and that's why you need a lawyer to help you with this.
When should you get one done? If you're planning to sell something of value like your house, your car, jewelry, your pets, and anything that you can get something in return for, it is best if you have a contract with your buyer. Why? Because as the article said, it is where you list and outline the terms of the sale. Your buyer can either agree or not to continue with the transaction depending on what he or she reads in the contract and that avoids confusion among yourselves.
Contracts are also vital in situations wherein you're trying to contest something like when you sell your car but you didn't include the stereo inside it and the other party is claiming its part of the deal. You can easily show them that you specified it in the agreement which they gave their approval by signing. Can you do away with contracts? Yes. But make sure the other party is as honest as you. After all, no one wants to be called a liar.