• Agreement – one party must make an offer that is accepted by the other party.
• Consideration – each party must give something in return for the promises made by the other.
• Capacity to enter legal relations – each party must be of sound mind and legal age.
• Intention to enter legal relations – it must appear objectively that each party intends the agreement to create a legal relationship.
• Formalities – it must meet all the necessary formal requirements for the particular type of contract.
• Certainty – it must be complete and certain.
Within this framework though, it’s possible for a level of inequality or injustice to exist. As you sign contracts, whether an employment or a finance contract for example, it’s important to look for other key signifiers of equality. This means ensuring that the contract in question creates and holds a balance of power between the two parties, which gives equity to the relationship and enables the achievement of mutually beneficial outcomes.
The Trade Practices Amendment also examines the necessity for transparency and the understanding of context in making decisions about the fair or unfair nature of a contract. Potentially unfair contract terms often restrict control to one party or permit one party (directly or indirectly) an action not allowed for the other. Some examples of potentially unfair contract terms include:
• One party (but not another) can avoid or limit performance of the contract;
• One party (but not another) can terminate the contract;
• One party (but not another) can vary the terms of the contract;
• One party can vary the upfront price payable under the contract without the right of another party to terminate the contract;
• One party unilaterally can vary the characteristics of the goods or services to be supplied, or the interest in land to be sold or granted, under the contract;
• One party maintains the right to sue another party.
If you are concerned about a contract that you have or are about to enter into, or would like assistance in navigating the terminology of a contract please contact us on 1300 QUINNS or submit an online enquiry.