Mutual agreement

Mutual agreement
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A mutual agreement is also known as a contract and can be oral or written. A mutual agreement is when two parties undertake obligations to each other to do the defined actions. It is the concept which spans the spectrum of meanings and complexity. A contract can be used in any transaction. It can relate to a sale, a service or the transfer of property ownership. There can be more than two parties to a contract as the individuals, businesses, or governments. A mutual agreement can be also as informal as a marriage when two parties enter the legally binding contract of marriage. Also in business, you can stipulate in a contract any condition under condition that all parties agree to the terms. In much the same way, the contract can be canceled by mutual consent (Goddard C., Fellner A., Ormand R. 2019, p.22).

The early 20th century brought changes in protecting both contacting parties by a mutual agreements or contracts. The details required for the enforcement of mutual agreements were established and later enforced by courts. What is more, the greater consumer protection was achieved, ensuring actual mutual agreement between large corporations and consumers. For the conducting a business, agreements and contracts are important in all types of companies. Until the 20th century, there were not many written contracts. Usually personal deals were done just by a handshake. Nowadays, most of the agreements are documented in written form. Contracts have become important and detailed documents and every effort is made to cover all eventualities and business scenarios (Holmes O. W. 1881, Lecture 7).

Content of a mutual agreement contract

A mutual agreement contract which is legally binding should include:

  • An offer and its acceptance.
  • Consideration: the parties promise to exchange something valuable. The contract cannot restrict one entity without requiring the other to pay or provide a service in return.
  • A legal purpose.
  • Capable parties.
  • Mutual assent: both sides must agree to the terms and understand them.

The basics of mutual agreements

A mutual business agreement should contain:

  • Both names and addresses of the parties involved.
  • When the agreement takes effect.
  • A description of how the parties will work together.
  • The terms of the agreement.
  • What type of notice is required.
  • How the parties can complete the contract.

Mutual agreement procedure ( MAP )

The mutual agreement procedures are contracts between two countries. If a person considers that the actions of one or even both of the contracting parties result in taxation which is not in accordance with a tax treaty or the double taxation agreement (DTA), the MAP is an instrument for the resolution of such international tax disputes. It protects the taxpayer's rights of being taxed in accordance with a DTA. A double taxation agreement (DTA) is an agreement that regulates the purpose of taxation rights for income which is generated across borders. If actions by one or more countries make the taxation that is not in accordance with the double taxation agreement, the taxpayer can request a mutual agreement procedure (United Nations 2017, p.4).

References

Author: Anna Pietruszewska