Importance of Contract in Business Dealing

Contracts are essential for transforming casual transactions into long-term, successful business relationships. A well-drafted contract ensures that both parties clearly understand their rights, responsibilities, and obligations.

Now, this doesn’t necessarily mean every contract needs to be prepared by a lawyer—unless the financial risk involved is significant. In most cases, even a standard Purchase Order (PO), Work Order, or a written confirmation from the client can serve as a valid contract, provided it contains all essential terms. In addition to the commercial terms, every Purchase Order/Work Order should ideally include the following clauses:

Payment Terms: Payment shall be made within the credit period mentioned in the PO. In case of delayed payment, interest at the rate of 18% p.a. shall be charged by .
Claims and Deficiencies: shall not be held responsible for any short supply or defect in goods/services if not reported within 3 days of delivery.
Payment Instructions: Detailed payment instructions should be provided to avoid any delays or confusion.
Jurisdiction for Payment Instruments: All Cheques/DDs/Payments shall be payable at only.
Legal Jurisdiction: All disputes arising from this transaction shall be subject to the exclusive jurisdiction of courts in .
Pricing & Additional Charges: Prices mentioned in the invoice are final unless otherwise agreed. The seller’s price includes standard packaging but excludes GST, insurance, transportation, and any other applicable taxes or levies. These will be charged additionally and shall be borne by the Buyer. Such costs will either be included in the invoice or billed separately by .

At VLA India, we advise and assist entrepreneurs in drafting and vetting contracts to ensure that all potential differences between parties are addressed upfront. This helps lay the foundation for successful and mutually beneficial business relationships.