01.What is a contract?
A contract is a legally enforceable agreement made between two or more people. It can be verbal or written, but it’s a good idea to have a written contract so that everyone is clear about the terms. When a contract is verbal it can be difficult to prove what was agreed to or even that a contract existed.
A contract exists when one party makes an offer and the other party accepts it.
Contracts can be entered into in lots of different ways, such as:
- you sign a document that clearly describes itself as an agreement or a contract
- you agree to something over the phone
- you click on an “I Agree” button on a website
Sometimes contracts are unfair, particularly if one party has all the bargaining power and the other party feels like they have no option but to agree. Standard form contracts
are more likely to be unfair contracts because they are prepared by one party and are usually offered to consumers on a take it or leave it basis. For example, gym membership contracts
have long been a source of unfair contract examples.
Contracts have terms and conditions which set out the rights and responsibilities of each party. Here are some things to look out for:
- Take time to read the contract - ask if you can take it away
- Make sure you read through the contract and understand everything, especially the fine print
- If you don’t understand something, ask!
- If you still don’t understand something, or if you are unsure about anything, seek legal advice
- Don’t sign a contract because you feel pressured into it
- Make sure there aren’t any blank spaces in the contract - these might be filled in later and you won’t know what has been added
- If any changes are made to the contract these should be signed or initialed so it is clear that all parties have agreed
- Make sure you get a copy of the contract
Once a contract has been agreed to, you are usually stuck with it. If one of the parties wants to change the conditions or get out of the contract, they might have to pay a penalty to cover any losses suffered by the other party.
Sometimes you can get out of a contract without penalty, such as if it’s within a cooling off period if the sale was a door to door or telemarketing sale or if the seller has engaged in misleading and deceptive conduct or unconscionable conduct.
Terms in standard form contracts may also be subject to the unfair contracts laws under the Australian Consumer Law.