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What do we need to know about Contracts?

Updated: Mar 18



Photo Courtesy: Christina Wocintechchat collected from Unsplash


As social creatures, we enter into agreements all the time. Contracts are a specific form of agreement. However, all agreements are not contracts. You might agree to go to the movies with your friends at the weekend. That is an agreement with you and your friends. It is not a contract. An agreement becomes a contract when it is enforceable by law. We must understand that how do we form a valid contract and the rights and the liabilities attached to it. By understanding the contract that you enter into, you will be able to negotiate contracts that will work better for you. It will also help you to effectively manage and avoid future complications. However, it is still important to get professional advice to fully understand your rights and obligations under a contract. If you want more information on contract laws in Australia, please visit https://www.australiancontractlaw.com/contractlaw.html


1. What is a Contract?


A contract is a form of agreement, between two or more parties, based on acceptance of an offer. Contact is an agreement that is enforceable at a court of law. To be a valid contract in Australia, an agreement needs to satisfy the following elements:

  1. There must be a clear offer from one party (‘offeror’).

  2. The other party (‘offeree’) must have accepted the offer.

  3. There must be a valid consideration that has been paid between the offeror and the offeree.

  4. There must be evidence of a mutual intention from all the parties for the agreement to be legally enforceable.

  5. The terms constituting the agreement must be certain.

  6. Each party must have had sufficient capacity to enter the contractual agreement.

In addition to these basic requirements, there are certain types of contract, like contacts involving the land transfer or employment contracts, must meet more specific legal requirements.


You can enter a contract by:

  • signing a document

  • selecting a product in a shop and paying for it at the check-out counter

  • clicking on an ‘I agree’ button on a web page.

It is unlawful for businesses to force or coerce you into entering a contract.


2. What are the terms and condition of a contract and why are those important?


Contracts have terms and conditions which set out the rights and the responsibilities of each party under the contract. Terms and conditions specify what you can and cannot do while performing the contract. You should make sure that you read and understand the terms and conditions of a contract before you accept those. If you are unsure, please seek legal advice.

It is a common practice for businesses that they will offer you the same or similar contract as everyone else. Those are called the standard form contracts. However, you may have the opportunity to negotiate before you agree to those terms. There are laws to protect you from unfair contract terms in standard form consumer contracts, where you have little or no opportunity to negotiate with the trader.


3. When can I break a contract?


A contract comes to an end on performance or discharge. It means that when all the parties to the contact finish performing their part of the agreement, the contract comes to the end. If you want to break the contract before such a performance or before the specified time, it generally attracts a penalty. However, there are limited circumstances when you may end a contract without attracting any penalty. Such circumstances include the following:

  • if all the parties agree to end the contract;

  • if it becomes impossible or illegal to perform the contract;

  • if the business has misrepresented the goods, services, terms or conditions to a consumer;

  • if there is a mistake by one or all the parties;

  • if there is duress or undue influence involved;

  • if there are any unfair terms involved in the contract;

  • if there is any unconscionable conduct involved;

  • if a cooling-off period applies.

A cooling-off period is a safeguard, designed to allow consumers to change their minds, about a purchase or agreement they have made. You have a right to a cooling-off period when you purchase goods or services through telemarketing or door-to-door sales or insurance contracts.

4. What are my remedies if the other party fails to perform his/her part of the contract?


Where a breach of contract has occurred, the law provides the remedies to the non-breaching party. In particular, they are entitled to damages as a matter of right. Therefore, if the other party fails to perform their part of the contract, you are entitled to get damages to cover your loss.


It is generally up to the court to determine the extent of damages caused by failure to perform a contract by a party. However, you can make provision in your contract for the payment of a liquidated sum upon breach by a party.


In addition to common law remedies, you also will have the option to seek the equitable remedies of specific performance or injunctions for contractual breach or threatened breach. However, these equitable remedies are not available as a matter of right. The court may award you such remedies at its discretion if it feels suitable.


If you need legal help with your up-coming contract or to understand your rights and obligation under an existing contract or to enforce it, or need to find a lawyer to help you with your contract, please feel free to contact us at www.lawcircuit.com.au or call us at 0418631798 or email us at bonhi@gmail.com.au . We are here to make your legal journey easier.


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