Terms in commercial contracts are often specified very specifically and clearly. This is the basis to ensure the rights and obligations of the parties in the contract. In addition, it also ensures the legality of the contract. So when does a commercial contract come into effect? What are the terms of the contract?
1. What is a commercial contract?
There is currently no legal document that defines a commercial contract. However, it can be understood as an agreement between the parties to jointly establish terms on the rights and obligations of the subjects in activities such as buying and selling goods, investing, providing services, promoting trade... with the purpose of making a profit. The adjustment or termination of rights and obligations is also clearly stated in the contract.
2. When does a commercial contract come into effect?
A commercial contract is only legally valid when it satisfies the following conditions:
- The organization or individual signing the contract must be in accordance with their function and duties. The person signing the contract must have full civil capacity.
- The content and purpose of the contract must ensure the benefits that the parties wish to achieve when concluding the contract and must not be contrary to the law. The terms of the commercial contract are also the content that the parties have agreed upon.
- The conclusion of commercial contracts must be based on the principles of voluntariness, equality, honesty and cooperation. The contract will be invalid if there is coercion or deception during the process of concluding the contract.
- The contract must be made in writing in the traditional way or established in the form of a data message by electronic contract.
See more: Benefits of electronic contracts
3. Terms in commercial contracts
The terms of a commercial contract are very important, showing the rights and obligations of the parties in a commercial transaction. This is the basis for businesses to avoid unnecessary disputes. Below are 8 terms that should be included in a contract.
3.1. Terms of information of the parties
Information of the parties is a mandatory provision. This is to identify which specific organization or individual is involved in the contract.
For individuals, it is necessary to provide complete and accurate information about name, address, and citizen identification. For organizations or businesses, it is necessary to provide information about name, headquarters, representative, and establishment license in accordance with the information provided on the Establishment Decision.
3.2. Terms of contract subject
There are many different types of commercial contracts. Each type of contract has its own subject matter. For example, a contract for the sale of goods has the subject matter being the goods being bought and sold. The contract must clearly and specifically define information such as the name of the goods, quantity, quality, etc. For service contracts, the subject matter is the work. The contract must clearly state the method of performing the work, the performer, the results, etc.