CRITICAL REVIEW - LEGAL CONTRACTS

Critical Review - Legal Contracts

Critical Review - Legal Contracts

Critical Review - Legal Contracts

Critical Review - Legal Contracts

Critical Review - Legal Contracts

Introduction

In section 69 of Rethinking Construction (1998) the Construction Task Force chaired by Sir John Egan wished to see 'an end to reliance on contracts. Effective partnering does not rest on contracts. Contracts can add significantly to the cost of a project and often add no value for the client. If the relationship between a constructor and employer is soundly based and the parties recognize their mutual interdependence, then formal contract documents should gradually become obsolete.' (Egan, 1998)

Sir Egan's dream or idea is one which is based on idealism. He is of the opinion that if the people all perform their roles and responsibilities in the proper fashion then, will not be a need for any specific formal or informal contract. Such an idealist way of business or governance is possible only in a utopian society where everything and everybody is completely fair, honest and there are no possibilities of things going wrong (Moyn, 2010). A business organization however in the modern world has several factors to consider when entering a partnership with another body. It needs to protect its own interest as much as the second organization. In matters of dispute, because problems and unforeseen incidents happen, the body which is on the wrong needs to be identified and penalized for its shortcomings, the other partner should not suffer for it.

Such matters when happen are taken to the arbitrator which is the Law. The law finds the guilty party that was responsible for negligence or accident and penalizes them in favor of the other party. (Clarkson, Miller & Cross, 2012)

A legal contract exists simply to highlight and clarify the duties of the two or more partners that are working together in tandem (Blond, Petrillo & Gruning, 2009).

The details of the contract are created with the consent of all the organizations that are co-signing it. It helps in legally chalking out the responsibilities of each organization and serves a secondary purpose of putting the partnership in of the business before the eyes of the government.

Executive Summary

There are two types of contracts, formal and informal. These contracts essentially exist to protect the interest of both the parties that are agreeing to cooperate together. It serves to highlight and identify the responsibilities each partner, its domain and its limits of operation and claims. Companies unlike people have the potential to exist for infinite amount of time. As long as the company remains profit, it continues to exist. The human force which is comprised of the organization keeps changing over time due to a variety of reasons, like resignation, firings, hiring and even death. The contract serves to keep a record of the terms and conditions that were agreed upon at the moment of the signing of the ...