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Contracts – It’s more than just about Trusting Each Other

by | Oct 10, 2017 | Business, Contracts

There is a general reluctance among Businesses to not have contracts in their business dealings. Even if they do have contracts, they are poorly drafted or taken from “google”. This is due to many reasons but the most common reason is that the parties feel that they can trust each other. Having a contract is more than just about trust.

  1. A contract contains the terms and obligations of the parties including what parties agree to do and the time for doing such things; whatparties agree to pay and when to pay; the agreed actions to be taken should certain matters arise during the contract period. Some people don’t remember what they had for lunch yesterday, much less to remember what was agreed years ago.
  2. Even if there are no disputes arising between the original parties of the contract, the new owners / other partners of the business may not know of the original agreement and terms. Unnecessary disputes could have been avoided if a contract was drawn up between the original parties.
  3. In fact, if both parties are Muslims, the need for a written contract was even mentioned in the Quran:-

“O you who believe! When you contract a debt for a fixed period, write it down. Let a scribe write it down in justice between you. Let not the scribe refuse to write as Allah has taught him, so let him write. Let him (the debtor) who incurs the liability dictate, and he must fear Allah, his lord, and diminish not anything of what he owes. But if the debtor is poor understanding, or weak, or is unable himself to dictate, then let his guardian dictate in justice. And get two witnesses out of your own men. And if there are not two men (available), then a man and two women, such as you agree for witnesses, so that if one of them (two women) errs, the other can remind her. And the witnesses should not refuse when they are called on (for evidence). You should not become weary to write it (your contract), whether it be small or big, for fixed term, that is more just with Allah; more solid as evidence, and more convenient to prevent doubts among yourselves, save when it is a present trade which you carry out on the spot among yourselves, then there is no sin on you if you do not write it down. But take witnesses whenever you make a commercial contract. Let neither scribe nor witness suffer any harm, but if you do (such harm), it would be wickedness in you. So be afraid of Allah; and Allah teaches you. And Allah is the All-Knower of each and everything (al-Baqarah: 282).

NIK ERMAN NIK ROSELI

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