From the e-Activity, propose a methodology for assessing the risk in business contracts. Assess the economic impact this methodology may have for the organization. Analyze a situation in which both parties entering into a contract could benefit, economically or otherwise, from slightly ambiguous language contained in the contract. Provide specific examples to support your response activity:
Enterprises conduct business transactions with other enterprises for a number of economic, business and strategic motivations. These business relationships are often governed through legal business contracts. Contracts are instruments in not only establishing the legality of the business relationships but also
(1) To spell out the expected behaviour from all parties concerned,
(2) To make explicit all the obligations and responsibilities that each party undertakes to fulfil and
(3) To divide the potential risks and costs involved in the proposed business transaction so as to be a mutually satisfactory arrangement. In this paper, we focus on the risk assessment and evaluation of proposed business contracts. By analyzing the obligations and their fulfilment criteria as stipulated in the business contract and thereafter applying risk models, we propose a methodology for evaluating the suitability of a proposed contractual terms and conditions for a particular business organization.