CONTRACTS

            A contract is an agreement between two parties.  It spells out what each party is responsible for in the agreement.  Contracts have been widely used since ancient times.  Early Mesopotamians wrote contracts on mud tables in cuneiform, an ancient alphabet written using the ends of marsh reeds. 

            Contracts are binding and are enforced by law.  Penalties are usually assessed when the terms of the contract are not fulfilled.  Contracts make it possible for individuals and corporations to work together with an assurance that each party will hold up its end of the bargain.

            For example, if a company is building a new phone, it might contract with a supplier to provide 100,000 plastic phone cases in an assortment of colors.  The company agrees to pay 10 cents per case.  The contract legally binds Corporate View to buy the phone cases at the stated price and the supplier to provide them.

            Contracts often include a penalty for late work.  The contract might state that if the plastic phone cases arrive at the company a month late, $1000 may be deducted from the price.  If the company fails to pay the full amount, the supplier can seek payment in court on the basis of the contract.

            Without contracts, it would be very difficult for corporations to work together.  Contracts are certainly one of the most significant inventions of the business world.