A quota agreement can be used to create huge benefits for both parties. One advantage would be that it would be limited to the loss that would occur if the contract were cancelled. Another would be that there would be no victory of one party at the expense of others. The result is a strengthening of trust between the two sides, which would allow them to conduct more favourable negotiations in the future.  It was found that the contract was a contingent and, because of the end of the eventuality, there was no contract that could be based on the idea of an enforcement order. Quota agreements allow negotiators to be flexible without feeling that they have made compromises. What is a quota contract? In virtually all negotiations, the parties must make predictions and assumptions about the future. Will the materials arrive in time to allow the contractor to meet its deadlines? Do fuel oil prices remain stable or do they suddenly rise? The probability of uncertainty, which will ensure that the calculation of results is estimated if the event does not occur, relates to potential contracts when measuring the potential impact on its consequences. Contracting parties may anticipate that the performance of contractual obligations is contingent on an eventuality, even if the contract is valid. Parties who agree with the terms agree that the fees will be applied and that, therefore, the commitments will be due because of the possibility when the contract is awarded. El-Tek could have avoided the dispute by encouraging the divisions to bet on the result.
Instead of trying to convince suspicious audio executives that their profit forecasts were irrational, magnets could have offered a reasonable sum for the technology, with the following kicker: Audio would be credited with half of all annual profits in excess of $25 million. If the audio group believes its own forecasts, it would consider the offer fair and accept it. The quota contract would have removed the barrier of information asymmetry. Illustration: X enters into a contract with Y and promises to deliver 10 pounds. There promises to pay the R. 2000 on delivery. This is not a conditional contract, since Y`s commitment depends on the event that is part of the contract (delivery of 10 pounds) and not on an accompanying event. However, the “quota contract” means that the applicability of that contract depends directly on whether an event occurs or not. Even in situations where contingency contracts would be reasonable and attractive, negotiators can avoid using them because of organizational pressure.
A company could, for example, have strict rules on the content of offers made during a negotiation. Or their procedures for compensation for negotiators cannot allow the setting of important contractual conditions to be deferred. The flexibility and uncertainty associated with contingency contracts may be in direct contradiction to such rules and procedures and limit the options of negotiators. In each of these cases, the party to whom the quota contract is proposed should accept the bet (or negotiate it easily) if its promises were true. To see how it works, imagine that two companies, one based in the United States and the other in Europe, are discussing the creation of a joint venture to market the product of the other. The U.S. company is confident that it will be able to sell $50 million of The European product in the first year, but the European company believes that this estimate is far too optimistic.