Why have Contracts?

Contracts are probably a necessary device in any kind of market economy where goods and services are exchanged by people acting in their own interest. People might not enter into agreements that call for some future performance unless they know some means exist to force other people to honor their promises.

It is also true that it would probably be impossible to have an industrialized, market economy without contracts. A manufacturer would be unable to do the kind of planning necessary to run a business if he could not rely on agreements with suppliers to finish the raw materials he needs to make the products. Similarly a manufacturer might not be willing to commit herself to buy raw materials or hire employees if she could not rely on buyers’ promises to buy her products.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

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