What is the primary purpose of commercial contracts?

The primary purpose of commercial contracts is to establish legally binding agreements between parties that clearly outline the specific terms, conditions, and obligations each party must adhere to. This foundational element of commercial contracts is crucial as it ensures that all parties involved have a mutual understanding of their rights and responsibilities. By doing so, these contracts facilitate trust and accountability in business relationships.

While providing a framework for negotiating business deals, ensuring regulatory compliance, and serving as a source of legal advice are important aspects of commercial transactions, they are secondary to the essential role of the contract itself. The binding nature and clarity provided by a well-drafted commercial contract help prevent disputes and provide mechanisms for resolution should they arise, thereby fulfilling its primary objective.