What is a contract and do I have one?

A contract is a legally binding promise or agreement made between two or more people

These pages give only elementary information about contracts. Be aware that contract law is complex and there are times when you may wish to seek legal advice.

Most contracts are in writing, but they can also be verbal. For example, when you buy bread in a shop and pay cash, although there is no signed piece of paper, in the eyes of the law there is still a contract between you and the shopkeeper.

Consumer Protection recommends that contracts about buying significant goods or services be in writing, so you have a record of the agreement.

Although businesses are not always obliged to provide consumers with copies of contracts, you should always ask for a copy of any contract you sign.

Once you sign a contract, you are bound by what it says, even if you haven't read or understood it.

All contracts about the purchase of land must be in writing.

Before you enter into a credit contract, you must be given a copy of the proposed agreement and certain other information.

If anyone breaches their obligations under a contract, the other party can seek redress (through the courts, if necessary). This may be for damages, repair, a refund or a replacement.

If there is a dispute about a written or verbal contract, the courts will not enforce it unless you can show that:

there was an intention to enter into a contract (i.e. you intended to buy the goods or services);
something (such as goods or services) was offered to you, which you then accepted;
one person received a benefit or suffered a loss (for example, you offered money for a loaf of bread); or
the people entering into the contract were legally able to do so, that is, they were over 18 and of 'sound mind'. Note: minors (people under 18) can't be held to a contract unless it relates to the necessities of life e.g., in a rental agreement.

Where you have a written contract, the document is usually considered (in law) to be the entire agreement between you and the other party (or parties). Therefore, to make sure you get everything to which you are entitled, it is important that the written contract clearly sets out everything that was agreed.

Both parties must comply with all conditions set out in a contract.

Before you sign a contract:

Read it very carefully, including the fine print.
Take it away with you, so that you are not rushed into signing on the spot.
Seek legal or other advice if you don't understand any part of it.
Check that all figures and any other information are correct.
Check that any verbal promises or claims made by the salesperson are written down.

You don't have to agree to any 'standard' written contract – you can change parts of it or add your own extra conditions, as long as everyone agrees to these.

Never sign a blank contract or one with blank spaces in it (put a line through these). If a salesperson says he or she will fill in details later, say "No thanks. Do it now".

Make sure you initial (or sign) and date all changes and additions.

Cooling-off periods

Very few contracts have cooling-off periods, unless you have written one in yourself and it has been agreed to.

Cooling-off periods are required by law only for:

door-to-door sales contracts of $50 or more;
personal insurance contracts; and
membership agreements at fitness centres.

More information

If you need further information, please contact us for help.

Or contact:

Citizens' Advice Bureau – check the phone book for the office closest to you.
Law Society of WA – 9221 4402.