Applescript creating Sym link with spaces in the path
Hm, I've run a similar script in AppleScript Editor but it works ok for me:

set contractsPath to "/Users/subhu/Test test test/"
do shell script "ln -s " &amp; quoted form of the POSIX path of contractsPath &amp; " ~/Desktop/test"


Note that, if you escaping a backslash with another backslash you have to use just contractsPath, not quoted form of the POSIX path of contractsPath, e.g.:

set contractsPath to "/Users/subhu/Test\\ test\\ test"
do shell script "ln -s " &amp; contractsPath &amp; " ~/Desktop/test"


Try it.