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Contracts

 

The law about consumer contracts changed on 1 January 2011. From 1 January 2011 Australian Consumer Law (ACL) is in operation. If you bought goods or services before then the old law applies. You may have different rights to those under the new law. This information relates to the new law.  For information on your rights for goods and services bought before 1 January 2011 visit the Australian Competition and Consumer Commission website.

What is a contract?

A contract is a legally binding agreement between two or more people. A contract can also be made with a business. Some examples of contracts are:

  • buying goods
  • buying a house
  • hiring a tradesperson to do some work for you
  • borrowing money
  • signing up for a telephone plan.

What should I think about before making a contract?

Contract law is complex. You should always read any contract carefully, including the fine print. You may wish to take the contract away with you so that you are not rushed into signing on the spot.

For more information about contracts and tips for making contracts refer to the Department of Commerce publication Contracts - Information you need to know.

Are all agreements binding?

Not all agreements are legally binding contracts. The law says to make a legally binding contract you need:

  • Agreement - an offer is made by one person and freely accepted by another.
  • Consideration - this means that you and each person entering the contract must promise to do something or give something of value (money, right or benefit) to each other.
  • An intention to enter into legal relations - this means that the people entering the contract intended to create a contract that is legally binding.

Some contracts have specific rules to be valid. If you don't understand any part of a contract or the consequences of signing a contract, get legal advice before you sign or agree to a contract.

Do contracts have to be in writing or can they be oral?

Contracts can be written, oral or both

The law says that some contracts must be in writing, eg buying or selling a house or land. Most of the time contracts do not have to be written down to be legally binding. If a contract is legally binding it means it is enforceable. Most of the everyday contracts we make are not written down, eg buying a movie ticket, buying food, or going to the doctor.

An oral contract can be as legally binding as a written contract unless it is one of those types of contracts the law states must be in writing although sometimes it can be harder to prove exactly what was agreed if there is a dispute.

Do contracts have to be signed?

In a few situations, contracts must be in writing and signed to be valid, eg sales of land and credit contracts

Some contracts have to be in writing and signed by the party you want to enforce the contract against. These include contracts for the sale of land and certain contracts of guarantees.

Never sign a contract unless you completely understand what you are getting into.

Should I get a copy of any contract I sign?

Yes, you should always ask for a copy of any contract you sign.

What if I didn't read it and now I have a problem with it?

Depending on the type of contract different rules may apply. If you sign a contract you are bound by its terms, even if you haven't read or understood the contract. There are very limited circumstances where a court will allow you to get out of the contract. The exceptions may include:

  • Where one of the parties has a "special disadvantage" which seriously affects their ability to make decisions about their own best interests and the other party takes unfair advantage of that condition, eg can include disability, sickness, extreme intoxication, age and illiteracy.
  • Where the contract cannot be performed because the subject matter is destroyed through no fault of either party, eg the land was lost in a landslide.
  • Where one or more of the parties to the contract are mistaken about something fundamental to the contract, eg where Mary agrees to sell her bike (bicycle) and John agrees to buy Mary's bike (motor cycle).

If this applies to you, get legal advice.

Does the Australian Consumer Law (ACL) apply to me?

From 1 January 2011 the ACL applies if you buy, lease or hire :

  • any type of goods costing up to $40,000 (note this amount may be changed under ACL in the future)
  • goods costing more than $40,000, which are normally used for personal, domestic or household purposes
  • a vehicle or trailer used mainly to transport goods.

When I bought my goods/services I was told something about the product/service but the service/provider says that it is not a term of the contract. What should I do?

Every contract has terms that the parties are obliged to follow, eg you pay money and the provider will mow your lawn. A term can be express or with consumer contracts, it may be something covered by a consumer guarantee. It is important to consider both express and consumer guarantees when disputes about consumer contracts arise.

Australian Consumer Law protects consumers against the making of false or misleading representations and misleading or deceptive conduct by a business.

Some statements may or may not form part of a contract. Sometimes a statement made to induce a person to buy a product is found by the courts to be a representation rather than a term, eg a car salesman saying that the car "is the world's best example of aeronautical engineering".

If you have any doubt about the terms of your contract seek legal advice.

What are express terms?

Express terms are terms that have been specifically mentioned and agreed by both parties at the time the contract is made. They can either be oral or in writing, eg the date payment is due, or the price of a service.

Some contracts may include terms which the parties have not written or spoken about. These terms are implied by law and must be followed.

What are consumer guarantees?

From 1 January 2011 consumer guarantees are the rights and responsibilities in relation to the supply of goods and services to consumers. They replace the rights and obligations previously covered under implied conditions and statutory warranties.

If you have bought goods as a consumer from a business covered by the ACL the guarantees include:

  • The goods must be of acceptable quality which means they must be safe, lasting, durable and free from defects, look acceptable in appearance and finish, and do all the things they would normally be used for.
  • The way the goods are described must be accurate.
  • They will satisfy any extra promises made about them.

If you have bought services as a consumer from a business covered by the ACL the guarantees include:

  • The services must be provided at an acceptable level of skill or technical knowledge, and all necessary care must be taken to avoid causing loss or damage.

  • The service must achieve your stated purpose or desired result.

  • If you have not specified  a length of time for the service to be completed, the service must be provided within a reasonable time. What is a reasonable time will depend on the circumstances.

Who can make a contract?

Most people over the age of 18 years can enter into a contract.

Special rules apply for people:

  • under the age of 18 years
  • with a mental impairment.

If one of these special rules applies to you, get legal advice.

Are all contracts enforceable?

Not all contracts are enforceable. For example, contracts won't be enforceable if they:

  • are agreements to do illegal things, eg a contract to sell illegal drugs
  • breach legal requirements or public policy
  • were never intended to be enforced, eg a contract made between family members that was never intended to be enforced.

Do all contracts have a cooling off period?

No, most contracts do not have a cooling off period, eg a contract to buy a car in WA. There are some exceptions which include:

  • unsolicited consumer agreements, eg door-to-door sales and other direct marketing contracts of $100 or more. You have 10 business days to reconsider. There are other direct marketing situations where you have an extended cooling off period. For details see the Australian Competition and Consumer Commission (ACCC) website or the Department of Commerce - Consumer Protection website on the Cooling off page and related pages.
  • membership agreements at fitness centres in WA. The code of practice requires a 48 hour cooling off period for these memberships. You can cancel in this period without needing to give a reason.
  • where a cooling off period was previously agreed between the parties.

Get legal advice if you are not sure of your rights and want to cancel before you cancel.

What if I can't do what I agreed to do?

You could contact the person you made the contract with and try to come to another agreement, eg if you can't complete the contract in the time allocated you could ask for more time.

If you can't do what you agreed to do in the contract you are in breach of the contract. This means the other party can take legal action against you for breach of contract. In some cases the contract can be ended.

If a person successfully takes legal action against you they may be able to:

  • get money paid as compensation (sometimes this is called damages) for any loss they have suffered
  • get an order for you to do what you were supposed to do
  • get some other remedy (this can include repair, refund or replacement of goods and services)

A remedy is how a person is compensated for a breach of their legal rights, eg damages.

What can I do if the seller or service provider does not do what they are supposed to under a contract?

You should contact the person you made the contract with and ask that they comply with the contract. Depending on the type of contract and reason they are not following the contract it may be possible to negotiate an agreement that is suitable to you both.

If they can't do what they are supposed to do they are in breach of the contract. This means you can take legal action against them for breach of contract. In some cases the contract can be ended.

If you successfully take legal action against them you may be able to:

  • Get money paid as compensation (sometimes this is called "damages") for any loss you have suffered.
  • Get an order for them to do what they were supposed to do.
  • Get some other remedy (this can include repair, refund or replacement of goods and services).

A remedy is how a person is compensated for a breach of their legal rights, eg damages.

If a seller or service provider fails to meet any of your rights under ACL as outlined here and your request for the problem to be fixed does not work, you should write a complaint letter. If that does not help you can report them to the ACCC (see below for details) or Consumer Protection (Department of Commerce) on 1300 30 40 54 to lodge a formal complaint. You may also be able to take your case to the Magistrates Court of WA in some situations.

Where can I find out more about my rights to ask for the repair, replacement or refund of goods and services?

For information about your rights for goods and services bought since 1 January 2011 visit the Australian Competition and Consumer Commission or the WA Department of Commerce websites.

Is there a time limit on taking someone to court for breaching a contract?

Yes. If you want to take legal action for breach of contract or if someone wants to take legal action against you, there are strict time limits. You should get legal advice about the time limits that apply in your case.

Should I see a lawyer?

If you have questions about a particular contract you should see a lawyer. You will need a copy of your contract and any other relevant papers before getting advice.

Where can I get more information?

  • Contact Legal Aid WA's InfoLine on 1300 650 579.
  • Contact the Department of Commerce - Consumer Protection Advice Line on 1300 304 054.  It provides information and advice on Australian Consumer Law including consumer guarantees on good and services, unfair contract terms and misleading and false representations, and help with resolving disputes with traders and businesses. You can also see sample complaint letters on its website eg for unsatisfactory car repairs, fault goods or services or unsatisfactory building work. A free "conciliation" service to help resolve disputes between buyers and sellers of goods and services is also available.
  • The Department of Commerce - Consumer Protection's website has additional information for Indigenous consumers including publications.
  • Indigenous consumers and community organisations can report instances of unfair trading practices by ringing the National Indigenous Hotline on 1300 303 143.The hotline operates between 8.30am and 8pm Eastern Standard Time (6.30am-6pm in WA). Alternatively consumers can call 1300 30 40 54 to access the Department of Commerce Consumer Protection’s WA-based Indigenous community education officers. The department also has six regional offices in Albany, Bunbury, Broome, Geraldton, Kalgoorlie and Karratha. 
  • Consumer Protection has developed iShopWA, an app that lets you check where you stand with refunds, warranties and lay-bys in WA. It can be downloaded free for iPhone and Android from the Department of Commerce website.
  • Contact the Australian Competition and Consumer Commission on 1300 302 502 for information on consumer rights and how to make a complaint or go to the MoneySmart website. 
  • For information about buying online go to E contracts and online buying.
  • For information on disputes over goods and services in the Magistrates Court of WA go to Disputes over good and services.
  • For more information on disputes with builders go to Building disputes.
  • If you have a small business you may be able to get assistance in resolving some types of disputes through the Small Business Development Corporation (SBDC) WA. Contact the SBDC on (08) 6552 3300.
  • For information on contracts and buying a car see the My Car website. This website resource provides essential information for car buyers, whether buying privately, through a car dealership or at auction. Use this website to learn about your legal rights when buying a car and where to get help if something goes wrong. 
  • For information on how to protect yourself against hoax and scam emails targeting Australia Post customers visit the Australia Post website.

 Last reviewed: 10/01/2013

Last Modified: 09/06/2014

Disclaimer

The material displayed on this page is intended for information only. If you have a legal problem, you should see a lawyer. Legal Aid Western Australia believes that the information provided is accurate, however does not accept responsibility for any errors or omissions.