Have you signed the contract?
The word “contract” is used in a huge variety of industries by an even wider variety of people. While the technicalities of a contract in legal interpretation are extensive, at its core, a contract is an understanding – a promise even – between two or more people/organisations to do certain things.
What is a Contract?
For most, when a reference is made to a “contract”, it is a reference to an agreement between two or more parties. To be legally binding and enforceable, a contract needs to have six (6) key elements:
- An offer and acceptance of that offer.
- Evidence of intention by the parties to be bound by the Contract.
- The consideration which, in plain terms, is a transfer of something from one party to the other in exchange for something else e.g. money for goods/services.
- The parties must have the legal capacity to enter into the Contract.
- The parties must consent to the terms of the contract and not be agreeing to Contract terms because of misrepresentation, duress or undue influence from others.
- The Contract must be of a nature that is not otherwise illegal or purporting to do illegal things.
If any of these six (6) elements are missing in the contract, then it will not be a legally binding and enforceable contract.
Why should I have my contract in writing?
“If a thing is worth doing, it’s worth doing well”. Contracts are no different.
Everyone enters into contracts every day without even realising (or at least without taking them seriously); be it buying a coffee or renewing a Netflix subscription. However, in the world at large, contracts are what allow individuals, businesses, and even governments to operate. With so much at stake, written contracts are important to:
- Provide certainty of the contract terms and conditions by reducing ambiguity. If an agreed condition is in writing, it is much harder to dispute.
- Grant warranties, impose confidentiality and/or exclude liability which, depending on the greater transaction in question, can be absolutely essential for years even after the contract has been completed.
- Set clear directions for dispute resolution with a view to any disputes being resolved sooner (if not immediately) rather than later.
- Afford the contract an opportunity for the contract to continue via severance e.g. if only a small component of the contract is in dispute, this can be “severed” from the contract and dealt with separately while the undisputed component can continue uninterrupted.
- And if the worst should happen and a dispute cannot be resolved, a written contract will be significantly easier to enforce.
Does a contract have to be in writing?
Although they are becoming less common, many contractual arrangements use verbal contracts. A “handshake” agreement may still be a contract by having all six (6) required elements. However, if the parties of verbal contracts enter into a dispute, there is the potential for significant uncertainty about each party’s rights and obligations making it difficult for anyone, even a Court, to determine what the original intent of the contract was.
Who do I contact about contracts?
For advice on contracts, whether it is the purchase of a property or a review of your employment agreements, contact Rhys Larsen and the team at WGC Lawyers on 07 4046 1111 and [email protected].