Why Are Contracts Important? 5 Key Reasons


Nowadays, contracts have become a daily part of our lives. Even the terms and conditions agreements you normally accept without reading are contractual agreements between you and the service you are signing up for. 

Even as a physician, having written contracts with your clients is important. You can even have physician contract reviews done to ensure you haven’t missed any details and are confident in the terms and conditions of your agreement. 

If you are still wondering why contracts are important, here are five reasons to consider getting that deal penned down. 

Contracts Are Records of Commitments

Contracts are visual representations of the relationship between the agreeing parties. They serve as official records that they have agreed to work together and foster a connection that will benefit each party. Contracts also hold every side to the agreement and serve as a reminder that both sides can be held accountable to the terms set when it is written and signed.

They Prevent and Mitigate Risks and Conflicts

Before deals are made, contract negotiations are done to ensure every side gets the best possible outcome. They outline the terms of the agreement and spell out what should be done in case of a disagreement. This mitigates risk and prevents parties from backing out of a deal in case there’s conflict. Contracts can also be used as references when the dealing parties plan how to work together, increase operational efficiency and collaborate on projects. 


One of the best things about contracts is that they can include non-disclosure clauses and agreements for concerned parties to keep some information secret. This can be great if you are dealing with classified documents or want to keep some transactions private. 

Offer Clarity and Improve Collaboration

For a contract to fulfill its purpose, it needs to be well articulated in clear and concise language that outlines the responsibilities of each party and their rights. It should also explain how the involved parties will work together and the dispute resolution methods to follow if there’s a disagreement. Other key details that contracts make clear and specific include payment terms, performance and auditing guidelines and situations that can lead to the termination of the deal. 

Contracts Reflect a Company’s Brand and Values

Sending a contract to your clients fosters trust and, by extension, shows them that your company and brand care about having a detailed relationship. It also shows that your company is committed to the deal and willing to do everything possible to bring it to fruition. Using the right wording in the contract drafting creates a better relationship between the company and its clients, as they feel cared for and treated fairly in the negotiations. All these qualities positively reflect your brand and improve the reviews and customer ratings.


Handshakes and oral agreements are great, but it’s important to have written documents that outline the nature of your agreement. Deals fail, conditions change, and relationships can fall apart. That’s where contracts step in to ensure everyone meets their end of the bargain.


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