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What is a contract?
- is an agreement between two or more parties, intended to be legally enforceable
- can be written or verbal, or both
- has terms and conditions.
A contract is created when one party makes an offer and the other party communicates an intention to accept it.
You can enter a contract by:
- signing a document
- taking something from a store shelf and paying for it at the check-out counter
- posting a letter of acceptance
- clicking an ‘I agree’ button on a web page.
Some contracts must be in writing, (for example, a contract to sell land or a lay-by contract.
The terms and conditions of a contract make up the agreement of the parties, and their rights and responsibilities. The terms can be either:
- spelled out (set down in writing or expressed verbally)
- implied (either by law or as necessary to make sense of the agreement).
Before you enter a contract
- Read a written contract carefully. If you do not understand it, get advice from a legal practitioner or contact us before you sign.
- Protect your own interests. Ask for conditions to be added, changed or removed.
- Make sure details of the contract meet your requirements and reflect your understanding of the agreement.
- Insist on an escape clause if the contract requires you to do something you are uncertain about.
- Remember that when you have signed, the contract becomes a legal document and can be difficult to cancel without penalty.
Unfair contract terms
Unfair terms in consumer contracts are not allowed under Australian law.
Unfair contract terms laws apply to consumer contracts such as those used for:
- domestic building
- motor vehicles
A term is unfair if it:
- would cause a significant imbalance in the parties’ rights and obligations, eg. shifting obligations to the consumer or restricting their rights
- is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term
- would cause detriment, financial or otherwise, to a party if applied or relied on.
Only a court can decide if a term in a consumer contract is unfair.
If a court finds a term is unfair, that term is treated as if it never existed. If the contract can operate without the unfair term, it will still be binding.
If you answer YES to any of these questions, your contract may contain unfair terms:
- Are you penalised, but the supplier is not, if the contract is terminated?
- Can the supplier change or vary contract terms, the price, the product or the service without asking you?
- Does the supplier have the sole right to interpret the meaning of the contract?
- Can the supplier avoid, limit, terminate or renew the contract, but you cannot?
- Can the supplier determine whether the contract has been breached, but you cannot?
- Is your right to sue the supplier over the contract limited?
- Is the font size and style difficult to read?
- Does the contract contain long sentences, clauses or paragraphs?
- Does the contract contain confusing jargon and technical terms?
- Is there a lot of cross-referencing within the contract?
If you think there are unfair terms in your contract seek advice from a legal practitioner or contact us.
Last updated: 22/03/2013