Introduction

It is possible to describe a wheel in terms of its end purpose but a complete understanding is lost without a description of the concept and operation of the axle. Similarly any detailed discussion of the commercial aspects of business without reference to contracts would be misguided. There would be many ways of describing business without such reference. It would be possible to talk about investment as an input and profit as an output, or resources as an input and product as an output. But without discussing contracts, a key part of the story is missing. It is easy enough to say that the engineer should contribute to increasing profits by ensuring that contracts are delivered on time, to specification and at minimum cost because failure in these respects eats up money, which erodes profit. But the simple consequence higher internal cost of such failures is only a small part of the story. To fully appreciate the picture it is necessary to understand this thing called the contract. In this chapter coverage will be given to underlying legal principles, common contractual phrases and points of practical importance.