What is a contract

A contract:

  • is an agreement between two or more parties
  • is legally binding
  • can be written, verbal, or both
  • has terms and conditions.

A contract is created when a party makes an offer and the other party accepts it.

You can enter a contract by:

  • signing a document
  • taking something from a store shelf and paying for it at the check-out counter
  • posting a letter of acceptance
  • clicking an ‘I agree’ button on a web page.

Some contracts must be in writing (for example, a contract to sell land or a lay-by contract).

The terms and conditions of a contract make up the agreement of the parties, and their rights and responsibilities. The terms can be either:

  • spelled out (set down in writing or expressed verbally)
  • implied (either by law or as necessary to make sense of the agreement).


  • It is important to always read contracts carefully before signing
  • Contracts are legal documents. Ask questions and get advice
  • Keep copies of documents or anything signed
  • NEVER sign a contract you do not understand
  • Say NO if you feel pressured.

Contracts for products, services, or the sale or grant of interest in land, must comply with the Australian Consumer Law (ACL). These are called standard form contracts, which:

  • have been prepared in advance for consumers to sign
  • give an offer on a ‘take it or leave it’ basis
  • the terms are not negotiated with consumers.
Updated: 27 May 2020