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Contracts

Contracts are legally binding agreements that outline the terms of business relationships, providing legal protection, risk management, and clarity. They include key components such as parties involved, scope of work, payment terms, and confidentiality clauses. An example is a Service Agreement between a digital marketing agency and a clothing brand, detailing their obligations and dispute resolution methods.

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Jaleece Whatley
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2 views

Contracts

Contracts are legally binding agreements that outline the terms of business relationships, providing legal protection, risk management, and clarity. They include key components such as parties involved, scope of work, payment terms, and confidentiality clauses. An example is a Service Agreement between a digital marketing agency and a clothing brand, detailing their obligations and dispute resolution methods.

Uploaded by

Jaleece Whatley
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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17th March, 2025.

Jae’s Tutoring
POB Topic: Contracts

 Contracts are legally binding agreements between two or more parties that outline the terms and
conditions of a business relationship. They ensure that all parties involved understand their rights,
responsibilities, and obligations, reducing the risk of misunderstandings and disputes.

Roles of Contracts in Business:

1. Legal Protection – Contracts provide a legal framework for business dealings, ensuring that parties
are held accountable for their commitments.
2. Risk Management – Clearly defined terms help mitigate risks by specifying responsibilities,
payment terms, deadlines, and dispute resolution methods.
3. Clarity and Certainty – Contracts outline expectations, deliverables, and conditions, reducing
ambiguity and potential conflicts.
4. Enforceability – If one party fails to meet its obligations, the contract serves as a legal document to
enforce compliance or seek remedies.
5. Confidentiality and Intellectual Property Protection – Some contracts include clauses that protect
sensitive business information and ownership rights.
6. Financial Security – Contracts often define payment schedules, pricing, and penalties, ensuring
businesses receive compensation for their goods or services.
7. Professionalism and Credibility – Well-structured contracts enhance trust and credibility in
business relationships.
8. Regulatory Compliance – Some contracts ensure businesses comply with legal and industry
regulations.

Example: Service Agreement

A Service Agreement is a contract between a service provider and a client that outlines the terms of the
service being provided.

Example Scenario:

A digital marketing agency (Service Provider) signs a contract with a clothing brand (Client) to run social
media campaigns.

Key Components of the Contract:

1. Parties Involved:
o Service Provider: XYZ Digital Agency
o Client: ABC Clothing Brand
2. Scope of Work:
o The agency will manage Facebook, Instagram, and TikTok ads.
o Deliverable: 10 posts per week and ad performance reports.
3. Payment Terms:
o Total fee: $5,000 per month.
o Payment due: First of each month.
4. Duration & Termination:
o Contract duration: 6 months.
o Termination: Either party can terminate with 30 days' notice.
5. Confidentiality Clause:
o The agency cannot disclose the client’s marketing strategies to third parties.
6. Dispute Resolution:
o Any disputes will be resolved through arbitration in New York.
7. Liability & Indemnification:
o The agency is not liable for third-party platform downtime.

This type of contract ensures both parties understand their obligations and provides legal protection in case
of disputes.

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