LAW REPORT
• That the agreement is in writing : although there is no requirement , it is advisable to put all contracts in writing , so as to help clarify what promises were made and that it was meant to be binding . In contract law there are only a few contracts that must be in a particular form , such as those for selling property , otherwise there is no requirement as to form . A contract can be as simple as outlining who are the parties , what is the consideration and what is the penalty for not complying .
• That there is a signature : a signature on a contract can also be used to show that the parties intended it to be binding . Once a person signs a document , they state that they accept all the terms and that they are bound by them . If they have not read what they have signed , or understood it , they are still bound by it as it was their responsibility to do so . This is probably one of the most important points . YOU ARE BOUND BY THE CONTRACT . Many people think that if they simply change their mind they can get out of an agreement . Legally it does not work that way .
One of the best pieces of advice I can give you is to never sign any document without reading it first . Even if you think it is unimportant , you will still be bound by what you have signed . Remember , claiming that you didn ’ t know what the contract was about or that you didn ’ t read it , won ’ t be a valid excuse for trying to get out of it .
Once a contract has been made , the terms cannot be changed unless both parties agree . Unless both parties are happy to vary the terms , they must continue as agreed and they have an obligation to carry out their part of the bargain . It is a good idea to think about how a contract will work for you before agreeing to it .
Most terms of the contract will set out information relating to what the contract is about , but there are other terms that are more complicated .
• Termination clauses : these cover how the contract can be brought to an end by each party . There is often a notice period given , and in some circumstances a penalty may be incurred .
• Breach clauses : to breach a contract means that one of the parties has not carried out their part of the bargain . They have failed to fulfil their obligations ( e . g ., they bought a car , but they did not pay the remainder of the purchase price after the deposit ). Most contracts include in their terms what happens if someone is in breach , and provide some sort of penalty .
• Exclusion clauses , waivers and disclaimers : many contracts have clauses which seek to limit liability in some way . They are often written in legal jargon and are difficult to understand , but usually state that a person won ’ t be liable for certain things . These clauses are valid protection , provided that the person has not done something negligent . A person cannot sign away their rights at common law if there has been negligence .
Make sure that your client screening form includes an exclusion clause / waiver . It outlines to a client that they have a responsibility too , to be honest while you are screening them . It may also protect you from claims that have no basis in negligence . These clauses often make a person think twice before launching into frivolous legal action , but remember no clause is 100 % effective . No exclusion clause will protect you if you ’ ve been negligent . We ’ ll look more at this topic in upcoming articles .
Unfair Contract Terms
The Australian Consumer Law ( ACL ) includes provisions that address the use of unfair contract terms in standard form consumer contracts . This is done by removing unfair terms from standard consumer contracts . It does not apply to business-to-business contracts or insurance contracts .
A consumer contract is a contract for the supply of goods or services to an individual for personal , domestic or household use . A standard form contract is one that is prepared by the business , contains a set of generic terms and conditions , is negotiated between parties and is presented on a ‘ take it or leave it ’ basis .
A term is deemed unfair when the following three conditions are met :
• If the contract terms are one-sided and greatly favour the business over the consumer ;
• There is no satisfactory commercial reason why the business needs such a term ; and
• The consumer will suffer financial loss , inconvenience or other disadvantage if the term is enforced .
The ACL contains a list of some of the terms that might be considered unfair . You can still include these terms , but when used in certain circumstances they could be deemed unfair . Some examples are :
• Terms that allow the business to make unilateral changes to important aspects of the contract , such as increasing charges or varying the type of product to be supplied .
• Terms that avoid , limit or restrict liability of a supplier for a breach of the contract .
• Terms that require consumers who breach the contract or end it early to pay an excessive amount in compensation or cancellation fees .
So , take some time to review any new contract you are thinking about signing . It is also a good time to look over the contracts you currently use to see if they are valid and provide enough protection . If you don ’ t have any , maybe now is the time to think about formalising your various agreements . Remember prevention is always better than cure !
JATMS | Spring 2023 | 161