If they are not, there may be problems. No matter what type of business you have, all contracts you enter into must be legally binding. Understanding basic information about what a contract can or cannot impose on you or your company is essential. Trade agreements assume that the parties intend to be legally bound, unless the parties explicitly state otherwise, as in a contractual document. For example, in the Rose- Frank Co/JR Crompton-Bros Ltd case, an agreement between two commercial parties was not reached because the document stipulated an “honour clause”: “This is not a commercial or legal agreement, but only a declaration of intent by the parties.” Pre-contract documents often contain a non-binding overview of the conditions on which the parties have agreed in principle, so that the parties can see how close they are to an agreement and provide a framework for future negotiations.