Businesses enter into contracts almost as a matter of course. Contracts are valid whether they are written or verbal. Unsigned contracts (that is agreements that are reduced to writing but never signed) whilst not carrying a lot of force may assist a Court in deciding what terms were agreed.
A contract may also be binding even if you think you had not yet reached final agreement on terms. One critical aspect is the conduct of the parties, and if the parties perform under the proposed agreement, there is likely to be an inference that they intended to be bound. And if there are problems with establishing that there was a finalised agreement, that does not mean that the other party is prevented from claiming losses suffered.
Further information about the characteristics of a contract is set out in Making a Contract . Under the Australian Consumer Law (ACL), in certain cases business have the same rights as individual consumers under consumer guarantees. The exception is where the goods are purchased for:
- To use up in trade or commerce, either in manufacture or treating or repairing other goods.
In addition, the amount paid or payable by the business for the goods cannot not exceed $40,000, or the goods must be of a kind ordinarily acquired for personal, domestic or household use or consumption. There are varying interpretations by courts of the meaning of goods of a kind ordinarily acquired for “personal, domestic or household use or consumption.” Items costing more than $40 000 such as agricultural machinery, or aircraft would obviously be excluded, but in the case of carpet (domestic quality but installed in a night club) or an alarm system which could either be used in business premises or domestically, the situation is not so clear cut.
If you are supplying goods or services to individual consumers and you have written terms and conditions that are not usually negotiated with your customer, you should have the terms and conditions reviewed by a lawyer to ensure that the agreement does not contain unfair contract terms.
More detail is set out under Consumer Protection and in the section entitled Exclusion Clauses.
Pursuant to ss 23 - 28 of the ACL, a term of a consumer contract is void if it is unfair. A consumer contract is a type of standard-form contract, where the supply of goods or services, or grant or sale of an interest in land, is to a consumer for wholly or predominantly personal, domestic or household purposes. A standard form contract is one where a consumer is not given the opportunity to negotiate the terms. More information is set out in the section called Unfair Contract Terms.
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.