You gotta have clarity and fairness in business. You and the people around your business should know the way forward. Let’s consider a story, rather an experience.

1️⃣ Once, I decided to partner with someone on a project. Excited about our collaboration, we jumped right in without putting anything in writing but a handshake. We did not realise that the handshake was slippery. Big mistake. As the project progressed, disagreements arose, and without clear terms, both of us did not know what the terms was, things quickly went out of control. It was a lesson learned the hard way.

2️⃣ Fast forward to another project with a new client. This time, we both signed a contract before getting started. The contract outlined our responsibilities, deadlines, and payment terms, and most importantly the default clause and the cancellation clause. With everything clearly spelled out, there was no room for misunderstandings or disputes. We knew our path, we knew how to make it work, we knew how to cancel it and we knew the cost of defaulting. Everything clear. The project went smoothly, and our partnership flourished.

When both parties agree to the terms and sign on the dotted line, it creates a foundation of trust and accountability. Moreover, contracts also provide a safety net in case things don’t go as planned. They establish procedures for resolving disputes and ensure fair treatment for all involved.

While not always necessary, registering contracts legally adds an extra layer of security. It provides official recognition of the agreement and strengthens its enforceability if needed.

So, the next time you’re entering into a business arrangement, remember handshakes are slippery, contracts are strong!

Additional Points to note:

  • Write the contract mutually.
  • Add cancellation and default clauses. You need to know how to get out of the deal if required, and what is the cost of defaulting as well.
  • Read the contract in detail, do not miss a word! Full clarity!
  • Ask if the other party feels the contract is fair, as it explicitly!
  • Sign it. Now do the real handshake.
  • Both parties keep a copy and use this as a single source of truth for the partnership / business.
  • Your trustworthiness and credibility lies on how you treat the terms of the contract!

“O you who believe! Fulfill (your) obligations [or contracts]” [al-Maa’idah 5:1]

Hakim b. Hazim (Allah be pleased with him) reported Allah’s Messenger ﷺ as saying: Both parties in a business transaction have the right to annul it so long as they have not separated; and if they speak the truth and make everything clear they will be blessed in their transaction; but if they tell a lie and conceal anything the blessing on their transaction will be blotted out. Sahih Muslim 1532a (Book 21, Hadith 57) #10985