A written contract carries out basic tasks. You record the rights and responsibilities of both parties, that is, you clarify your arrangement and mitigate business risks.
Risks are mitigated, in particular, by legal enforcement of the contract. If something goes wrong and another party breaches the terms agreed, you will normally take legal action. If it causes some loss or you don’t get paid, you will get compensation through a court as a last resort.
Between the 2 extremes of writing a ‘necessary minimum’ doc for trusting each other parties and going to the court, however, there are other aspects of doing business. How will the conclusion of the contract affect your relations with this counterparty/ future clients? How the contract will be fulfilled?
These questions are answered by contract management. In fact, you invest in the business relationship around the signature of the document - pre-award and post-award phases
- and get better performance of the contract and your company.