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A company writes payment date and delay penalty in a contract. What is the main benefit?

Answer and explanation

Correct answer: Payment-related rights and obligations become clear

Stating the payment date and penalty for delay makes the rights, obligations, and consequences of breach clear to both parties. It can also provide evidence of the agreed terms if a dispute arises. Option B is incorrect because a penalty may discourage delay, but it cannot completely eliminate the possibility of late payment. Exam tip: Link clear written contract terms with legal certainty and dispute prevention.

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Business EnvironmentLegal EnvironmentContract TermsPayment ObligationsCommercial ContractsClass 12Business StudiesClass 12 Mcq

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