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General principles of contract law

Consumer topics

ContractOverview of Australian contract law

Australian contract law may be broadly divided into five categories

  • formation
    dealing with the requirements for making a valid contract
  • scope and content
    dealing with identifying contractual terms and their scope
  • avoidance
    dealing with how a party may avoid performing an otherwise valid contract (this overlaps with consumer law)
  • performance and termination
    dealing with what is required to fully perform a contract and the other circumstances that might bring a contract to an end (including breach)
  • remedies
    setting out the damages and other remedies that might be available to a contracting party as a result of a breach of contract by the other party.

These categories are described briefly below. More detail can be obtained by selecting from the category links to the left or from the sub-category links below.

Formation

A contract is a promise or a set of promises that is legally binding.  In this context a promise is an undertaking by one person to do something or refrain from doing something if another person does something or refrains from doing something or makes a promise in return.  A promise or set of promises will be legally binding if certain criteria are met. In Australia this requires that there be an agreement (comprising an offer and acceptance), consideration, intention to create legal relations, compliance with any legal formalities and that the parties have the legal capacity to contract.

 

Scope and Content

A contract is generally only enforceable by and against parties to the contract. This section considers the issue of privity of contract.

This section also considers the content of a contract; once formed, how do you determine what the terms of the contract are? How should the various terms by classified and how should they be interpreted in cases of ambiguity? Exclusion clauses are given special attention here.

 

Avoidance / Vitiating Factors

A contract validly formed may nevertheless be avoided as a result of a number of possible 'vitiating factors'. Most of these involve some form of unfair or unconscionable dealing by one of the parties.

 

Performance and Termination

Most contracts come to a natural end as a result of the parties performing their respective obligations. The requirements for 'performance' to discharge contractual obligations are discussed in this section. A contract may also come to an end by agreement between the parties or as a result of the breach of contract by one of the parties. Finally, a frustrating event might prevent parties from performing as planned and this may have the effect of terminating a contract.

 

Remedies

Where a breach of contract has occurred the non-breaching party is entitled to remedies; in particular, they are entitled to damages as a matter of right. The procedures for determining the extent of damages available are discussed in this section. Parties may also make provision in their contract for the payment of a liquidated sum upon breach; the effect of these clauses will be discussed.

In addition to common law remedies, parties may seek the equitable remedies of specific performance or injunctions for contractual breach (or threatened breach) - these are not available as a matter of right but are awarded at the discretion of the court.

 

Overview of Australian consumer law

For a more detailed discussion select the relevant topic from the left hand menu. Below you will find a brief overview of each broad topic - Australia's consumer law regime is currently undergoing significant change. One major bill has already passed through Parliament and another has recently been introduced. Throughout 2010 this site will provide details of these changes.

Consumer guarantees

A set of nationally consistent consumer guarantees replaced the previous set of federal, state and territory implied terms on 1 January 2011. View consumer guarantees page.

Unfair terms

A national unfair terms regime came into operation in 2010 which renders void unfair terms in standard form consumer contracts. View unfair terms page.

Unconscionable conduct

In addition to unconscionable conduct in equity, which may vitiate a contract, statutory rules prohibiting unconscionable conduct exist. They now form part of the Australian Consumer Law. View unconscionable conduct page.

Manufacturers' liability

Contractual liability (save for special cases) extends only to parties to the contract. Consequently, consumers generally cannot sue manufacturers at common law directly. However, statute has imposed direct liability on manufacturers in some cases. These provisions now form part of the Australian Consumer Law.

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