Ever bothered about the correlation between rights and obligations?
In every contract, rights and obligations exist in a complementary relationship, with each party possessing their respective rights as well as obligations.
Rights in a contract refer to what each party is entitled to exercise or receive. Simplest examples could be payment for goods or services provided, the right to enforce specific terms and conditions of the contract and so on.
Obligations, on the other hand, stipulate as to what each party is supposed to do or deliver under the contract. Again, delivering goods or services as promised under the contract, making timely payments, or maintaining confidentiality of the information received under an NDA are some small examples.
Rights and obligations in a contract never exist in a vacuum. They always work in tandem. One party's right is always the obligation of the other party.
Effective contracts denote the rights and obligations of each party so as to minimise any potential misunderstandings and disputes between the parties on these. Clarity in this aspect empowers the parties in appreciating the scope of responsibilities and the benefits each party is subjected / entitled to.
Further, an explicit mention of respective rights and obligations of the parties also helps in effective dispute resolution, should any conflicts arise on these issues.
Therefore, it is very important for all parties to comprehensively incorporate, understand and acknowledge their rights and obligations before entering into a contract - such an endeavour will to some extent, ensure mutual satisfaction and compliance with the terms.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
