Ever heard a sweeping statement about contract law, and been not quite sure if it was true? We’re here to help. Here’s a list of some common misconceptions about contracts that we hear all the time at Sanicki. <\/p>\n\n\n\n
Contrary to popular belief, contracts don\u2019t have to be written to be legally binding. They can be made orally, via text messages, or even through conduct, as long as some basic elements are satisfied: <\/p>\n\n\n\n
That said, there are some<\/em> types of contracts that have to be in writing to be legally binding, for example:<\/p>\n\n\n\n A written contract is often a good idea. It provides clear evidence of the terms of your bargain, and can help avoid disputes down the track.<\/p>\n\n\n\n Not all terms in a contract are necessarily legally enforceable. Here are some examples of types of contractual terms that are commonly unenforceable:<\/p>\n\n\n\n Terms involving illegal activity are unenforceable. For example:<\/p>\n\n\n\n Under the Australian Consumer Law (ACL)<\/strong>, unfair terms in standard form contracts (such as those used with consumers and small businesses) are not enforceable. A term is considered unfair if it:<\/p>\n\n\n\n Terms must be clear and certain. If a term is vague or ambiguous, it may be unenforceable because a court can\u2019t determine what was intended. This could include uncertainty about price, quantity, or delivery.<\/p>\n\n\n\n If a person agrees to a contract under duress, undue influence, or misrepresentation, it may not be enforceable. For instance:<\/p>\n\n\n\n A contract doesn\u2019t have to be signed to be enforceable, as long as the fundamental elements of a contract are met: offer, acceptance, intention to create legal relations, consideration, capacity, and certainty. Many contracts, particularly verbal or implied contracts, can be legally binding without a signature. However, a signature typically serves as evidence that a party has agreed to the contract terms. It helps avoid disputes by clearly showing that the parties intended to be bound by the agreement. <\/p>\n\n\n\n However as mentioned above, there are some types of contracts that have to be signed to be enforceable. <\/p>\n\n\n\n Electronic signatures are generally enforceable as long as they meet certain requirements under the Electronic Transactions Act 1999. <\/p>\n\n\n\n Minors generally don\u2019t have the full legal capacity to enter binding contracts. However, there are important exceptions to this rule.<\/p>\n\n\n\n Minors can enter contracts for necessities essential for their well-being, such as food, clothing, education, medical care, and accommodation. These contracts will be enforceable if they are suitable to the minor’s life (e.g., their social or financial standing) and are necessary for their actual needs at the time of the sale. <\/p>\n\n\n\n Minors may also enter binding contracts that are for their benefit. For example, contracts of employment, apprenticeships, or training. It is recommended however for a legal guardian to sign these types of contracts on the minor\u2019s behalf, because the question of whether a contract is for a minor\u2019s \u2018benefit\u2019 is often contentious. Courts assess factors like fairness, the working conditions, and payment. If a contract is harmful to the minor, it is likely to be unenforceable.<\/p>\n\n\n\n For contracts that do not fall into either of these acceptable categories, minors may still enter into them, but they are generally voidable at the minor\u2019s discretion. If a minor enters into a contract and then, on turning 18, continues to act in accordance with the contract (such as making payments or using goods or services), the contract may be considered ratified. This means the contract is now binding.<\/p>\n\n\n\n It is generally a good idea to have a written contract, even if you trust each other. A contract provides a clear framework, prevents misunderstandings, and protects your interests in case things go wrong. <\/p>\n\n\n\n A contract should clearly outline the terms, including rights and obligations of each party, payment terms, delivery schedules, dispute resolution mechanisms, and other key details. People’s memories can fade or differ over time, and disputes can arise even between parties who initially trusted each other (trust us, it happens all the time!). <\/p>\n\n\n\n Additionally, unforeseen events can change the dynamics of an agreement. For example:<\/p>\n\n\n\n\n
2. If it\u2019s in the contract, it\u2019s legally enforceable<\/strong><\/h2>\n\n\n\n
Illegality<\/strong><\/h5>\n\n\n\n
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Unfair Contract Terms<\/strong><\/h5>\n\n\n\n
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Ambiguous or Unclear Terms<\/strong><\/h5>\n\n\n\n
Duress, Undue Influence, or Misrepresentation<\/strong><\/h5>\n\n\n\n
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3. A contract has to be signed, otherwise it\u2019s void.<\/strong><\/h2>\n\n\n\n
4. If I\u2019m under 18, contracts aren\u2019t binding on me.<\/strong><\/h2>\n\n\n\n
5. If I trust the other party, so we don\u2019t really need a proper contract.<\/strong><\/h2>\n\n\n\n