A dependent contract is an accounting clause that refers to a contract that costs a company more than what the company receives in return. An example of a dependent contract could be an agreement to lease a property that is no longer necessary or can no longer be exploited for profit. Suppose a company signs a multi-year contract to lease office space, changes or shrinks while the agreement is still in effect, so that the offices for which it has no use are empty. Or think of a mining company that has signed a lease for coal or other commodity on land, but at some point, during the term of the contract, the price of that commodity falls to a level that makes extraction and marketing unprofitable. A few days ago, a virus attacked Catso`s network, damaging 10 of its computers. In accordance with the agreement with PC Solutions, they had to immediately deliver an additional 10pc, but they did not do so in 2 days and it was an obvious breach in their contract. Catso told the superiors of PC Solutions and they quickly resolved the case to avoid a catso lawsuit. Such an action will be very damaging for PC Solutions, as the contract is binding because of its nature. To be considered binding, these contracts must meet certain criteria. For example, a binding agreement must be signed by someone with sufficient legal capacity to engage himself or a third party. Catso Co., a large U.S.
supermarket network and PC Solutions LLC recently signed an agreement in which PC Solutions is committed to providing all the laptops, desktops and printers Catso needs in all of its equipment. This means that PC Solutions ensures that all users of the company have a computer available at all times. PC Solutions reserves a backup of new computers that will be immediately available to Catso if one of them breaks down. Definition: A binding contract is a legal agreement that can be applied by a court if one of the parties violates a clause. It is a legal obligation, acquired by one or more persons or companies, which may be subject to review in the event of a violation of the agreed elements of justice. The term is used in many countries around the world, where international regulators have determined that these contracts should be counted on balance sheets. The United States has a different system, based on generally accepted accounting standards, or GAAP, as defined by the U.S.-based Financial Accounting Standards Board. The term “inevitable costs” also has a specific meaning for accounting purposes. The IAS defines it as “the lower cost of executing the contract and all compensation or penalties arising from non-performance.” On the other hand, the treaty must be duly aligned with the law of the country which constitutes the legal framework of the country in which the contract is signed.
For a contract to be considered binding, it does not necessarily have to be written, but it would have to be recognized by both parties that an agreement takes place. A reference name describing a business unit for a financial or raw material future. Also, the actual bilateral agreement between the buyer and seller of a transaction, as defined by a stock exchange. A guaranteed investment contract in which the rating is linked to a floating rate reference, z.B. to a cash return at a specified maturity. According to IAS 37, any entity or entity that identifies a contract as having a dependent past is required to recognize the current commitment as a liability and to establish a list of that liabilities on its balance sheet. This process must be carried out with the first indication that the company expects a loss of the contract. A type of construction contract that requires the construction company to conclude a project according to pre-defined criteria for a price set at the time of signing the contract.