Contract FAQ and E's

Contract Frequently Asked Questions and Examples

What is a contract?

A contract is a legally binding agreement between two (or sometimes more) parties.
Contracts happen daily, and are usually verbal.

EG: When I purchase a lunch at my local store, I make a verbal contract to purchase the hamburger and pay with cash.

How do I make a contract?

There are 4 or 5 important factors that must occur for a contract (both oral and written) to be formed:

• Invitation to treat (optional)
• The offer
• Acceptance of the offer
• Exchange (known as 'consideration')
• Intention to enter into a contract (This is usually implied by the completion of the above)

EG: I see an TV advertisment invitating me to purchase a hambuger. I go to the shop, and the assistant there offers to sell me the hambuger advertised. I accept the offer and exchange the agreed amount in cash for the burger.

Do I need to hire someone in regard to a contract?

ANY contract which you do not fully understand should be explained to you by a legal professional. Also, any significant contracts (Purchasing a house, financing a car etc) should also always have a legal professional advice before signing.

EG: When purchasing a property, a conveyancer should be used.

What if a contract is broken?

A contract is a legally binding agreement and should not ever be breached. A court can stop the contract from being broken and/or apply damages when one has been broken.

EG: If I sign a contract stating I will not do an action. And then subsequently I brake the contract, a court can require I pay damages to the innocent party for the loss suffered.

... To be continued