Records: Overview, definition and example
What are records?
Records refer to documented information created or received by a business or individual in the course of their activities, often required to be maintained under a contract or legal obligation. These can include financial statements, meeting minutes, employee files, invoices, or other documentation that provides evidence of transactions, operations, or compliance.
For example, a business’s records might include sales reports and receipts used to track revenue and expenses.
Why are records important?
Records are important because they provide a reliable source of information for decision-making, compliance, and dispute resolution. Properly maintained records help businesses demonstrate accountability, meet legal or regulatory requirements, and protect themselves in the event of audits or litigation.
Including provisions for records in contracts ensures that all parties understand their responsibilities for creating, maintaining, and providing access to relevant documentation.
Understanding records through an example
A franchisor enters into an agreement with a franchisee to operate under their brand. The contract requires the franchisee to maintain accurate sales records and provide quarterly reports to the franchisor. This allows the franchisor to track performance, ensure royalties are calculated correctly, and assess the franchisee’s compliance with the agreement.
An example of a records clause
Here’s how a records clause might appear in a contract:
“Each Party agrees to maintain accurate and complete records related to their obligations under this Agreement for a period of no less than [Insert Timeframe]. Such records shall be made available for inspection by the other Party upon reasonable notice and during normal business hours.”
Conclusion
Records are an essential component of business operations and contractual relationships, providing transparency, accountability, and a basis for compliance and decision-making. Clearly defined records clauses in contracts help ensure that all parties understand their documentation responsibilities, reducing the risk of disputes and promoting trust and efficiency in business dealings.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.