Functions and Role of Law in Contract Management
Laws are quite important as they play several roles and functions both in the society and in business. Essentially, laws are rules and regulations that ensure that common sense is factored in as men relate to each other. Contract management can rather be challenging to undertake in corporations without laws that ensure that agreements between two parties are not violated. This paper discusses the roles and functions of laws in the society, as well as in business corporations, particularly with regards to contract management.
Roles and functions of law in business and society are quite significant. From basic morality, law has evolved overtime. Currently, proper existence of the society entirely depends on the law. Usually, the law is aligned with customs which has been deemed right or wrong by the society. On the other hand, the law is needful in business and its absence might actually paralyze business activities. This is because each and every individual would assume the free-for-all mentality (Emerson, 2009). This paper discusses the role and functions of the law in business and society. It gives detailed attention to the functions and role of law in contract management.
Laws are critical in business as they govern every aspect in order to ensure the smooth running of the business. In addition, laws ensure that other parties, including the customers, are not hurt in the business deals they have with the business. There are laws that govern business within states, between states, internationally, as well as the e-business. They ensure that manufacturing, distribution, and employment are executed promptly. For instance, companies are often required by law to ensure that the products they release to the market are safe for human consumption. It is because of its significance that the government has come up with several agencies to help control business law. These include the Federal Trade Commission, the U.S. Patent and Trademark Office, and the U.S. Consumer Product Safety Commission among others (Emerson, 2009).
A part from it is significant to the business world; moreover, almost every aspect of social behavior is governed by the law. The touch of law in one's life begins at birth when it determines the individual's citizenship and end at death on matters concerning the distribution of the person's will. Laws actually stretch across the entire life of each and every individual with involvement on issues such as marriage, divorce, as well as pet ownership. Laws that govern the society can be grouped into public and private laws. Public laws include criminal, labor, administrative, environmental, constitutional, and antitrust laws. On the other hand, private laws ensure harmonious relationship between one person and another. These laws include property, agency, corporation, and contract laws. Overall, laws, whether public or private, are formulated for the smooth running of the society (Emerson, 2009)
Finally, having worked as a contract manager, I have come to know that laws are also very much applicable to contract management. From its very definition, a contact is as an agreement made between two parties that is enforceable under the law. Contract management is one of the most important undertakings in the corporate affairs of any given company. Therefore, in order to safeguard the interest of any company, a lot of diligence is often required whenever contracts are made with parties such as partners, customers, and vendors. This is why it is important to ensure that any parties that are involved in a contract are legally bound to fulfill their agreement under the outlined terms and agreement (Kerschberg, 2011).
For instance, contracts have deadlines that can trigger penalties if not adhered to. There are also millstones that would essentially result into bonuses and even automatic renewals if actively achieved. The legal and regulatory requirements of contracts must be executed carefully and information, regarding the same, be reported clearly. In addition, laws ensure that corporations are able to implement sound legal contract management principles, which, in turn, help ensure that resources within the scope of the agreements are efficiently utilized (Kerschberg, 2011).
Laws are also necessary in managing contracts, since they allow important general obligations to be placed on both parties in any contractual agreement. For example, any contractual law will require both parties to execute their mandates in a manner that does not prevent the other party in the contract from fulfilling its obligations as per the agreement. Moreover, contracts have a life cycle that begins from creation to negotiation, storage, planning of important events of the contract and enforcement of all specifications. The execution of these stages, right from inception to termination or contract renewal, must be done in line with the relevant laws. In the event that a company terminates a contact prematurely, then it may suffer liquidated damages. Therefore, contract management requires one to be well-informed about laws to ensure a fair playing ground for all the parties (Kerschberg, 2011).
Just as in any other business activity, there is a real danger in failing to integrate legal function into the contract management processes of any company. The legal obligations in contracts ensure that each party honors its duties and roles. However, while executing legal requirement in contract management, it is critical to note that laws and rules were created in order to serve the society, rather than laws and rules being served by the society.
- Emerson, R. (2009). Business law. New York: Barron's Educational Series, Inc.
- Kerschberg, B. (2011). Legal contact management and the modern enterprise. Retrieved from //www.forbes.com/sites/benkerschberg/2011/04/06/legal-contract-management-and-the-modern-enterprise/