Can anybody provide 3-5 good reasons to establish a contract or agreement with another party?

Question by TJ: Can anybody provide 3-5 good reasons to establish a contract or agreement with another party?
Currently, a friend of mine has a business that does proofreading. He has several businesses that present proofreading services on their sites, but are using his services to provide these services to their users (outsourcing). They pay him his going rate and keep the difference. However, this is a very informal structure and no contracts or agreements are involved. I believe that he should set up formal agreements with these companies, but convincing him to do so is not easy.

Best answer:

Answer by princess_ana_natalia
1. To ensure payment
2. To limit liability in the event of error
3. To provide grounds for legal action in the event of a dispute
4. To limit liability to first party clients
5. To ensure reimbursement for legal fees in the event of legal action

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