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5 essentials of a business contract
Jul 20, 2012
It is always good business sense for business transactions, especially those involving large amounts, to be sealed by contracts in order to assure all parties’ compliance with the agreement.
In the Philippines, as stated by the Civil Code, people can use any form of contract provided all the essential requisites for its validity are present. These requisites are consent of the contracting parties, certain object (or subject matter of the contract), and cause of contract.
For contracts involving amounts below P500, a verbal contract would suffice; however, for amounts exceeding P500, the law requires written contracts. It is important that a contract is carefully prepared and written because it serves as basis for both parties on the terms and conditions of the contract.
The contents of a contract may vary depending on the extent of the agreement and the requirements of both parties. When preparing it, however, make sure that all the basic information are included in the contract. These are:
1. Names of the parties
The contract should clearly indicate the official and registered names of both parties. If one party is the client of the other, make sure to include the former’s contact details in order to avoid problems on billing later on.
Some companies have a list of accredited suppliers and regular clients. If however the second party is not in the list, it would be wise to check its registration status with the Securities and Exchange Commission.
This is especially important for transactions involving big amounts of money.
2. Contact information
The contact information in the document should be complete: it should include both parties’ complete addresses, telephone numbers, fax numbers, email addresses, website URLs, and mobile numbers and names of contact persons.
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