A contract is a legally-binding agreement between two or more parties. You enter standard form contracts all the time - typically for mobile phones, gym memberships, and utilities.
This page includes general information on contracts as well as:
Contracts can be made in writing or verbally, and entered into in a number of ways including:
"It’s a good idea to have a written contract as it minimises misunderstandings and results in fewer disputes. With a verbal contract, it may be difficult to prove exactly what was agreed to, or even if a contract existed."
A contract has three elements:
Australian Consumer Law applies to ‘standard form’ consumer contracts for the supply of goods and services, or for the sale or grant of an interest in land, to an individual for personal, domestic or household use.
Generally, a ‘standard form’ contract:
"Despite what is written in a contract, there may be terms and conditions outside the agreement that the law imposes. For example, while a contract may include a clause saying 'no refunds', the law gives people a non-excludable right to a refund under certain circumstances."
You should be aware that payment of a deposit and/or signing any documents might mean you have entered into a contract and are bound by the terms and conditions of that contract.
Once you agree to a contract, you are committed to it, so it is important you are comfortable with the contract terms.
If you want to pull out of the contract before it’s finished, you may end up paying a penalty (sometimes the full amount of the contract) or you could be taken to court to compensate loss.
Some contracts may allow you to 'opt-out' or terminate your contract early, with or without a penalty. If you want an opt-out clause in the contract, you should get independent legal advice to make sure you are properly covered.
Consumers who breach a contract might have to compensate a business for any loss they incur.
In many instances, businesses are entitled to an amount to cover ‘reasonable costs.’ What is reasonable can vary with every contract.
The law requires that both consumers and businesses take reasonable steps to minimise any losses incurred as a result of a breach of agreement.
A customer books a hotel room for the weekend only to decide on the day of check-in that they no longer want the room. The hotel’s cancellation policy requires 48-hours’ notice or a cancellation fee is charged. This fee allows the hotel to minimise its losses if the room is not rebooked. The policy also prompts the customer at the time of booking to think about the contract they are entering into.
Businesses must ensure that contracts are performed with due care and skill.
In the event a consumer’s property is lost or damaged (particularly through business negligence), the consumer may seek compensation to cover this loss.
Before buying an item, make sure you know the expected delivery time.
The business must supply the goods and services in the time specified in the contract, or if a time has not been specified, within a reasonable time after accepting payment. What is reasonable can vary with each contract.
Australian Consumer Law protects consumers from misleading or deceptive conduct.
Business conduct is likely to break the law if it creates a misleading overall impression among the intended audience about the price, value or quality of consumer goods or services.
Whether a business intended to mislead or deceive is irrelevant, what matters is how their statements and actions - the 'business conduct' – could affect the thoughts and beliefs of a consumer.
Contracts should not contain unfair terms (legal obligations). Generally, a contract term is ‘unfair’ if these three conditions are met:
Australian Consumer Law protects consumers against unfair terms in standard form consumer contracts. The law applies to new contracts entered into on or after 1 July 2010 and terms of existing contracts renewed or varied on or after 1 July 2010.
Note: Contracts can still include these terms, as they are not banned, but if used in certain circumstances, they can be unfair.
Only a court or the NSW Civil and Administrative Tribunal (Tribunal) can decide if a contract term is unfair.
The court or Tribunal must consider:
If a court or Tribunal finds that a contract term is unfair, it is void. The term is treated as if it never existed and cannot be enforced or relied on. However, if the unfair term is removed, the contract still stands.
Australian Consumer Law does not apply to contract terms that:
Once a contract has been signed, neither party can change their mind. Everyone involved is bound by the terms and conditions of that contract.
If either party wants to pull out of the contract before it’s finished, they may end up paying a penalty (sometimes the full amount of the contract) or the other party may take them to court to recover their losses.
Some contracts allow a party to 'opt out' or terminate the contract early, with or without a penalty. If either party wants an opt-out clause in the contract, they should get independent legal advice to make sure they are properly covered.
There are limited circumstances when consumers may end an agreement without penalty. These include:
The Minors (Property and Contracts) Act 1970 binds minors (children under the age of 18) to contracts, leases and other transactions, where it can be shown the contract is for their benefit. It does not take into account parent or guardian wishes as to whether or not the contract should have been formed.
Note: People doing business with minors will often require someone (over the age of 18) to guarantee that the minor fulfills their part of the contract.
A non-disclosure agreement (also known as a confidentiality agreement) is a legal contract between two or more parties that prevents the disclosure of certain information to an outside party.
A non-disclosure agreement may be used to settle a dispute between a consumer and a person or a business, so that both sides can achieve a result without having to go to court or tribunal.
Every non-disclosure agreement is different. The contract terms can vary depending on the parties involved, the type of agreement, payment information and how the agreement can be disputed or ended.
Contract terms may relate to:
"Consumers who raise a complaint about a product or service may be asked by the trader to sign a non-disclosure agreement, in order to receive a replacement, refund or compensation, and settle the dispute. It is not compulsory for the consumer to sign a non-disclosure agreement."
From 28 February 2019, a non-disclosure agreement cannot limit a consumer’s ability to lodge a complaint with NSW Fair Trading. Any such terms in a non-disclosure agreement will be void and not legally enforceable.
Before or at the time of asking a consumer to enter into a non-disclosure agreement, the law requires that the trader inform the consumer of their ongoing right to lodge a complaint with Fair Trading.
If a trader fails to inform a consumer of their ongoing right to lodge a complaint with Fair Trading, the law provides for maximum penalties of $22,000 for offences by corporations or $4,400 in any other case.
Before signing a contract, everyone should:
Find more information on unfair contract terms and the law on the ACCC and ASIC websites.
Can’t find what you’re looking for? Send a general enquiry.
The following agencies enforce provisions relating to consumer goods and services:
The Australian Securities and Investments Commission (ASIC) is responsible for financial products and services.