Skip to content

SITXMGT002 Establish and Conduct Business Relationships

In today’s time, the status of competition in every business has increased to a great extent, even the smallest business is not left untouched by the effects of competition.  In the same direction, a cafe was opened by ABC Accounting Inc as competition for Pax Cafe, which showed a decrease in the business operations and profits of Pax Café (Mayer, 2018).

As a head chef and owner of Pax Cafe, it has become necessary to lay down an action plan or establish of a business contract to maintain and increase the pace of business activities and profits ratio as well. Thus, doing the same type of business at the same place, necessitated the need to complete the process of negotiating a business-to-business contract for the supply of goods and services.  Along with this, in order to run the same type of business in one place, Pax Cafe will have to diversify its products so that the customer is attracted to the origin of its products.  Apart from this, keeping in view the action response of the hotel opened by ABC Accounting Inc, it will have to make changes in its business operations and production. Business contracts are legally binding contracts. The rules and regulations for carrying out the arrangements are set out in this Agreement (Gill, 2016).

To create this business agreement, Pax Café will first demonstrate a business relationship with ABC accounting Inc and discuss the terms and conditions of the contract.  There are mainly four essential features included in the contract or research, which include mutual consent, adequate consideration, validity, and valid proposal.  Along with this, the terms of trade should be fully clarified which includes providing the goods on the basis of time and demand of the customers.

While entering into a contract, it is necessary to fully mention all the terms and obligations under it so that no problem may arise while dealing with business in the future, along with dispute resolution clause and exclusion clause are included.  In the end, also rules and regulations are established to terminate the contract. This business contract shall set forth all federal laws that are essential for the smooth conduct and discharge of a contract.  For smooth conduct of business, Pax Cafe has to lay down an action plan and explain the product, analyze the market, prioritize the products on the basis of timing and customer demand, lay down clear goals, and the action plan to be implemented along with it.  But it will be necessary to keep monitor and controlling (Sadiq and Governatori, 2015).  The action plan and contract to be adopted by Pax Cafe will address the following requirements:

Action plan

Action Plan
Terms of trade The terms of the business are first specified while determining the action plan.  These terms of business include the terms related to supply chain management, customer, and sales.
Credit offers Offers will be made to attract customers towards your business and products.  These offers will cover the conditions for customers to borrow and make late but limited payments.  The payment period will be fixed at around 7 to 10 days.  This offer plan will be very fast and most popular among the customers.  But also, if the customer or wholesaler fails to make the payment within the stipulated time or non-payment, then appropriate legal action will also be taken against him (Raab et al., 2018).
Need additional staff The resources needed to fulfill your contracts and action plans with clients and additional staffing needs will also need to be considered.  As the facilities are made available to the customers (variety in payment and product), the list of such customers will grow and the need for additional staff will come.  The requirement of additional staff or resources will also have an impact on costs i.e., costs will also increase but this can be covered by the increasing number of customers.
Deposit requirement It is natural to need a deposit to grow any business or to change policies and plans.  Therefore, in the same way, for determining the action plan or contract in the Pax Cafe, the deposit will also be required on the basis of the area and production of the Pax Café (Williams et al., 2015).
Special dietary If the business wants to stay ahead in the competition and increase the profit ratio, then it becomes imperative to provide food and a special diet to the customers based on their needs.  Special diet includes vegetarian, non-vegetarian, semi-vegetarian, semi-vegetarian, gluten-free, and vegan products.
Add on Policies Pax Café has to expand its business and offline service, as well as online service, will also be included.
Cancellation policy The main motive of determining the action plan is to increase the ratio of customers to profit so that it can maintain its dominance in the market.  In the same direction, certain changes will be made under the customer’s order cancellation policies in which only a limited part of the order price will be returned to the customer.  Suppose that only about 60% to 70% of the order price will be returned to the customer (Chau et al., 2018).
Policy about contract A policy is also prescribed at the time of making each contract which includes a clause to terminate the contract for both parties.  If any such problem or conflict arises in the future, after which the operation of the contract is negligibly possible, then the contract can be terminated under this clause.


The contract between Pax Café and Gluten Muten: –

There are some clients of the accounting firm who express their special needs regarding diet.  And as their special dietary needs led to a demand for gluten-free products, it proved impossible for Pax Cafe to produce a gluten-free diet due to health and safety concerns.  But after local research, a company was found that manufactures gluten-free products as well as provides delivery (Harnjo et al., 2021).  So, in this situation, there is a need to make a separate contract which will be between Pax Cafe and Gluten Muten company. A contract is a legal agreement that is going to happen between two companies in this scenario, in which work is done for a fixed and stipulated work and amount.  The contract between Pax Café and Gluten Muten Company will primarily cover the issues related to gluten-free products and the price fixed for these products will also be specified in the contract so that no conflicts arise due to time in the future and changes in customer demand.  Along with this, the specific quantity, quality, and on-time delivery of the product will also be directed in this contract. All these decisions and modifications are done under legislation that is established by the company’s law and government (Kiss and Popovics, 2022).



Assessment 2

Scenario1: Contract between Pax Cafe and ABC Accounting Inc’s Café

Pax Cafe’s Manager: – Our business, customers, and profit are facing a lot of loss due to the opening of the café by ABC Accounting.  It would, therefore, be appropriate to establish a good relationship with ABC Accounting through a contract and include such issues in the contract as may be helpful in assisting in the conduct and development of the business.

Pax Cafe’s legal advisor: – Yes, absolutely right, I think that in the contract we should discuss all the conflicts that are coming in front of becoming obstacles in the conduct of business.  We have therefore incorporated favorable terms into the contract that seek to mitigate financial, legal, and operational risks.  I believe that in order to operate the same type of business at the same place, we should improve through our relation contract.

ABC Accounting Inc’s Café’s Manager: – But from my point of view, you have made the terms of the contract for the benefit of your company i.e., price and operating costs have been set as per your convenience.

ABC Accounting Inc’s Café’s legal advisor: – Yes, I completely agree with you that if the operating costs are set keeping in mind the scope of our business and the core costs, then we have no objection to accepting this contract.

Pax Cafe’s legal advisor: – But it seems to me that if the contract is set on the basis of both the area of ​​the business and the turnover, then it can help in maintaining the contract for a longer period.

ABC Accounting Inc’s Café’s legal advisor: – If there is a question about the long duration of the contract, then we will not have any objection to renewing the contract if the relationship remains good during the conduct of the business process.

Pax Cafe’s Manager: – Well, if I will come only after these changes are updated in the contract, then I am ready to do these updations.

Scenario2: Contract between Pax Cafe and Gluten Muten

Pax Cafe’s Manager: – As you know that is increasing day by day the demand for gluten-free products to our customers, however, so we are unable to produce the products we want your company supported us all these things’ contracts through be kept regularly up to a specified time frame.

Gluten Muten’s Manager: – Yes, of course, we have no objection to providing our support to your company, but we do have objections to the terms and prices set forth in this contract.

Pax Cafe’s legal advisor: – Yes you can tell me completely about your objection, I will give my full contribution to solve your objection.

Gluten Muten’s Legal advisor: – In the contract you made, we feel that the time limit should be reduced, as well as you know that it takes a lot of costs and effort to make a gluten-free product so we would like to see that you set Product prices should be increased.

Pax Cafe’s legal advisor: – But we have set the deadline to maintain a good relationship and work together for a long time.  And at the same time, we wish that we can enjoy the convenience provided by you for a long time.

Gluten Muten’s Legal advisor: – Yes, there is no doubt that we are not inclined to increase our business, but at the same time we want to reduce the time limit so that the new contract according to the demand of time and the situation to come will be made.

Pax Cafe’s legal advisor: – Well, I don’t mind reducing the time limit but the prices have been fixed only after proper market analysis, so resolving this objection can prove to be harmful to our business.

Gluten Muten’s Legal advisor: – Well if you are ready to accept one of our time limit conditions then we are also ready to increase your business and provide service at the price set by you.




Chau, H. W., Newton, C., Woo, C. M. M., Ma, N., Wang, J., & Aye, L. (2018). Design lessons from three Australian dementia support facilities. Buildings, 8(5), 67.

Gill, L. (2016). Using World Café to Enhance Relationship‑building for the Purpose of Developing Trust in Emotional Intelligence Training Environments. Electronic Journal of Business Research Methods, 14(2), pp98-110.

Harnjo, E., Rudy, R., Simamora, J., Hutabarat, L. R., & Juliana, J. (2021). Identifying Customer Behavior In Hospitality To Deliver Quality Service And Customer Satisfaction. Journal Of Industrial Engineering & Management Research, 2(4), 107-113.

Kiss, N., & Popovics, P. (2022). Gluten Sensitive Opinions On The Price Of Gluten-Free Products. SEA-Practical Application of Science, (28), 17-24.

Mayer, C. (2018). Prosperity: Better business makes the greater good. Oxford University Press.

Raab, C., Baloglu, S., & Chen, Y. S. (2018). Restaurant managers’ adoption of sustainable practices: An application of institutional theory and theory of planned behavior. Journal of foodservice business research, 21(2), 154-171.

Sadiq, S., & Governatori, G. (2015). Managing regulatory compliance in business processes. In Handbook on business process management 2 (pp. 265-288). Springer, Berlin, Heidelberg.

Williams, C. M., Nathan, N., Delaney, T., Yoong, S. L., Wiggers, J., Preece, S., … & Wolfenden, L. (2015). CAFÉ: a multicomponent audit and feedback intervention to improve implementation of healthy food policy in primary school canteens: protocol of a randomised controlled trial. BMJ open, 5(6), e006969.