Contracts are binding agreements that govern the relationship between two or more parties, defining what each party must and must not do in particular situations. Considered this way, it is evident contracts are commonplace in all aspects of our lives – whether this be buying a vehicle from a car dealer, signing a private or commercial lease or signing a mortgage agreement with your bank. Ensuring you are aware of your rights and responsibilities when it comes to contracts becomes particularly important in employment, business and other complex commercial transactions, when breaking a contract can have significant financial consequences and unwanted stress. In these situations, it is highly recommended you obtain legal advice so that your contract can be reviewed and approved to ensure the contract is fair and understood.
Contracts: What Are They?
Generally, contracts can be written or oral, or a mixture of both, except in the sale of a home, credit arrangement and several other situations, where the contract must be in writing The contract must contain an agreement, in which a party must offer something, and the other party must accept that offer. Next, there must be consideration – that is, the contract must stipulate that something of value is being given away. This can mean money, goods for sale or someone’s time or skill.
Contracts: How do you get out of them?
Generally, you are bound to the terms of the contract you are a party to. However, if a contract term is deemed unfair by the court, then the court can vary or make void that unfair term. When determining what constitutes an ‘unfair term’, the court will take into account several factors such as the scope of bargaining power between the parties. The Australian Consumer Law provides additional protections in contracts involving the sale of goods. In these instances, contract terms will be deemed ‘unfair’ where a party has acted ‘unconscionably’ or the term/s significantly favours or disadvantages one party. It is best to discuss any options you have in regards to getting out of a contract with a solicitor.
Breaking a contract
Breaching the terms stipulated in the contract leaves the court with several options to remedy the situation. For the party who has reneged on the contract, the court can order an injunction to stop the person from terminating the contract; order the person to carry out their contractual obligations; or have the contract declared void and order the person at fault to ensure the innocent party is in the same situation as they were in before the contract. For the ‘innocent’ party, the court can award monetary compensation for their loss, as well as the orders listed above that can ensure the contract is adhered to.
If you would like to have your contract reviewed by a solicitor, or are having problems with a contract you have already entered into, give us a call on 02 8917 8700 or fill out the enquiry box and we will get back to you ASAP.