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Contracts

South Australia

Contracts happen every day in life. For many contracts you probably won’t even know you’ve entered into one. For example when you go to the corner store to buy a litre of milk – that’s a contract. Below you’ll find answers to some frequently asked questions that we’ve received through Lawmail. If you have a question about mobile phone contracts or rental agreements you can find more information on our Renting and Mobile phone pages, or, if you have a question that we haven’t answered here please send us a Lawmail.

 

What is a contract?

 Can I enter into a contract if I'm under 18?

What happens f I don't follow through with my end of the contract?

What happens if the other party doesn't follow through with their end of the contract?

How can I get out of my contract?

 

WHAT IS A CONTRACT?

Q: Hi, my name is Tina from South Australia and I am 15 years old. My parents have promised to buy me a puppy if I get good grades at school this year. Is this a legal contract that will hold up in court if they don’t buy me a puppy? What exactly is a contract?

A: Hi, Tina.  Whether your parents’ promise is a contract will depend on a few key facts. If you both wanted the promise to be a contract, and if you made a promise to your parents in return, then you may have a contract.

A contract is an exchange of promises between two people that a court will uphold. This makes a contract different from a gift. A gift is one person’s promise to give something to another person.  A court will not uphold a promise to give somebody a gift.  A few things are needed to have a legal contract. 

First, you need an offer (that is, an offer to give something or to pay for something, like a puppy). 

Second, you need an acceptance of the offer.

Third, you need “consideration.” Consideration means that each party to the contract is making a promise to the other party to exchange something of value (like if you promised your parents that you would get good grades  in school in exchange for them getting you a puppy). Also, both parties must want to enter into a contract and expect the agreement to be upheld by a court. 

In most situations, a contract does not have to be in writing. That means you may enter into a contract with only spoken words or even actions.  However, it is always a good idea to have a written contract because misunderstandings are less likely and you may later prove to a court what the contract says.

 

Can I enter into a contract if I'm under 18?

Q: My name is Alex. I’m 16 years old and want to enter into a contract to buy a car. Can I enter into the contract even though I’m not yet 18? 

A: Hi Alex. The law is a little different in the various states of Australia but, in SA, you must be aged 18 and over to sign a contract.  In general, for a contract to be binding, you will have to affirm the contract (agree to be bound by it) after turning 18.

There may be exceptions to this age requirement: for example, if the contract is for a "necessity" (like your education, employment, or when you buy food), it will be binding. However, if the contract is not for a necessity, perhaps a mobile phone contract, or a contract to buy a car, then someone under the age of 18 cannot sign and be bound by the contract. In other words, the terms of the contract will not enforceable against an under 18 year-old. Of course, for various reasons, people under 18 do sign contracts, and then have to deal with the consequences. Be wary though, because someone under 18 can still be sued (for example, if you lied about your age when you signed the contract).

You should note that in South Australia, the Supreme Court can enforce the terms of a contract involving a minor providing that an application is made to the Court before entering into the contract. 

People or businesses entering into contracts with people under the age of 18 may want someone else (like a parent) to guarantee that the person will fulfil their half of the bargain. In SA, this makes the person giving the guarantee responsible for the contract if the person under 18 cannot fulfil the contract.  

What happens if I don't follow through with my contract?

Q: My name is Imogen, I’m 17 years old, and I entered into a contract for a gym membership. The agreement stated that I would pay a weekly fee. I have missed three payments so far. What rights does the gym have against me?

A: Hi, Imogen.  Assuming that the contract is valid in SA the gym may have the right to sue you for a “breach of contract,” meaning that you did not fulfil your end of the bargain. 
If you do not fulfil the terms of a valid contract, the other party will have the right to sue you for a breach of contract. The court will decide what happens, but some options include:


  • awarding a sum of money to the other party (“damages”);
  • ordering you to do what you originally promised to do under the contract (for example, to pay a certain amount of money for goods or services you received).

If you breach a contract that was never valid (for example because you are a minor), then the other party cannot get a remedy from the court based only on your breach. If someone tries to enforce a contract against you that is not valid, you should send them a written complaint explaining why the contract is not proper. 

 

What happens if the other party doesn't follow through with their end of the contract?

Q: My name is Nick, I’m 17 years old, and I’m in a contract with an internet service provider. They changed their rates without telling me, which is against the terms of the contract. What can I do?

A: Hi, Nick.  As a young person under 18, although many contracts cannot be enforced against you, you can still enforce the contract against the other party. If your contract says that you can “terminate" the contract if someone breaches, then you can choose to end the contract.  You also have the right to choose to sue the other party for damages or the court may order that the contract be fulfilled.  However, before you do this, there a number of other options you should explore.

You should first try sorting out the problem with the other party. This can be an effective approach, and does not involve the time and expense of going to court. As soon as a problem arises, you should contact the other party. 

However, if the other party is a trader and does not respond to the complaint, Consumer and Business Services may be able to assist with negotiations.

Should these options not resolve the issue, you may choose to sue the other party in court.  If you choose to pursue this option, you should contact an adult, your community legal centre, or Legal Aid to help you through the process. You may then be entitled to a number of remedies, including: awarding a sum of money to reimburse your losses (“damages”), ordering the other party to stop breaching the contract, or ending the contract and ordering the other party to pay damages. 

 

How can i get out of a contract?

Q: Hi, my name is Shania. I’m 16 years old and entered into a contract to buy a piano in South Australia, but now I realise I don’t need one because my cousin is going to give me hers for free. Can I get out of the contract?

A: Hi, Shania. Assuming that there are no terms in your contract allowing you to end the agreement without penalty, you are bound by the contract and not fulfilling your end of the contract will give the other party the right to sue you for “breach of contract.” 

However, if the other party acted unfairly or dishonestly, you may be able to get out of the contract without penalty. Also, if you bought the piano after being approached by a salesperson at your front door, over the phone, or in a public place, you have ten days to change your mind and cancel the agreement.

If you are in a contract, both parties are bound by the terms and conditions of that contract. If you want to end your contract, the other party may try to recover any losses that result from your breach. Be sure to read the terms of your contract to see if there are provisions allowing a party to end the contract early and whether there is a penalty for doing so.

In limited circumstances, you may end an agreement without penalty. If the other party has misrepresented the goods, services, terms, or conditions to you, you may be able to end your contract without penalty. 

If a court finds that there were unfair circumstances when the contract was made, the contract may be void. Contract terms may be deemed unfair by a court in a number of circumstances including if the term is much more beneficial to one party than the other, if it would cause harm to one of the parties, and if the term is not stated clearly.

Australian law also gives a “cooling-off” period for contracts entered into when a salesperson approaches you at your front door, over the phone, or in a public place (“unsolicited consumer agreements”). This gives buyers the right to “cool off” on their decision to enter into these purchase agreement within 10 business days.  So if you change your mind within those 10 business days, you may end the agreement with either oral or written notice. Written notice may be preferable in case you need to prove that you ended the contract.

Help

If you have a question about a contract that you have entered into (for example online shopping) or about contracts in general, please send us a Lawmail.

This page was last updated 16 April 2015.

 
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