What is a binding contract?

Sep 1, 2022 | Publication | 0 comments

A contract is a legally binding agreement. 

Often there can be an issue as to whether there is a valid contract or agreement between two or more parties.

For a contract to be valid and enforceable, in simple terms, there are a number of requirements:

1                     Offer and acceptance.  In simple terms, one party must make an offer to do or not to do something and the other party must have accepted.

2                     Consideration.  Generally, in order for there to be a contract, there must be consideration passing between one party to the other party.

3                     Intention to enter into legal relations.  The parties to the agreement must intend to enter into a legally binding agreement.

Generally speaking, a contract need not be in writing.

Issues can arise in relation to contracts.  For instance, there can be an issue as to whether a party has the legal capacity to enter the contract.  For instance, if one party has an intellectual disability this may prevent a contract being formed.

Courts will not enforce some types of contracts as a matter of public policy.  For instance, a contract to commit a crime or a fraud will not be enforced.

Some types of contracts are regulated by legislation.  For instance, the Australian Consumer Law applies to certain types of consumer contracts.

There can be consequences in relation to the formation of contracts.  For instance, if there has been a misrepresentation, there may be a right to rescind a contract.

It is important to obtain legal advice regarding your position.  For an obligation free appointment please contact Stephen McAuley, Principal Solicitor, or Bernard McAuley, Solicitor on (02) 9633 1826 or email sm@mcauleylawyers.com.au or bm@mcauleylawyers.com.au

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources. If you do not wish to receive newsletters from us, please let us know.

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