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Contracts

Tasmania

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 am under 18?

What happens if 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, I’m Patrick from Tasmania and I’m 15 years old. My older brother promised to give me half the money I need to buy my first car when I turn 17. Is this a legal contract that will hold up in court if he doesn’t pay me the money? What exactly is a contract?

A: Hi Patrick. Whether your brother’s promise is a contract will depend on a few key facts. If you both intended the promise to be a contract, and if you made a promise to your brother in return, then you may have a contract. While your agreement does not need to be on paper, it is always a good idea to write it down just in case you later need to prove what was said.

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 your university costs). 

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 mum that you would make high marks in school in exchange for her paying your university costs). 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 or “witnessed” (when someone who is not a party signs onto the contract to prove that it is trustworthy). 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 Yang Ting. I’m 16 years old and want to enter into a contract to lease an apartment.  Can I enter into the contract even though I’m not yet 18? 

A: Hi Yang Ting. In Tasmania, you may sign the contract, but the contract is only valid and binding if a court were to decide that the apartment is “necessary” for your standard of living based on a number of factors such as your age and means, which seems possible in this situation.  Also, even if the contract is deemed a “contract of necessity,” the owner of the property may want a parent’s signature as well as your own in order to “guarantee” the lease.

Generally, a contract entered into by someone under the age of 18 is not valid. This means that if you enter into a contract (because there are no laws to stop someone under the age of 18 from signing a contract), and you do not fulfil your end of the bargain, the other party involved does not have any rights against you.  On the other hand, you (the person under the age of 18) may enforce the contract against the other party involved. 

In certain situations, however, people under the age of 18 may be bound by contracts.  This happens when people under 18 enter into two kinds of contracts: “contracts for necessaries” and “beneficial contracts of service.”  Contracts for necessaries are contracts to supply goods or services that are usual or appropriate to the way of life of the buyer, including food, clothing, and accommodation. A beneficial contract of service is a contract that provides employment or training for employment so long as the contract is in the benefit of the person under 18.

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. This will make the person giving the guarantee responsible for the contract if the person under 18 cannot fulfil the contract. The person writing the contract will need to include certain terms to make this happen.

 

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

Q: My name is Shaf, I’m 16 years old, and I entered into a layby agreement to purchase a Playstation 4. I’ve recently lost my part-time job and it’s become very difficult for me to make the payments. I’ve missed two already. What will happen if I don’t pay off the product?

A: Hi, Shaf.  The contract is likely to be invalid in Tasmania because a Playstation 4 is unlikely to be considered “necessary” to your way of life and is not a beneficial contract of employment. The store will not be able to get a remedy from the court based only on your breach. If the store tries to enforce an invalid contract against you, you should contact them and try to negotiate a solution. You may want to ask to cancel the contract or ask if you can pay the cost in instalments that you can afford. If this does not work, you may send them a written complaint explaining why the contract is improper and that you should be able to get out of it. 

If the contract was valid and you did not fulfil your end of the terms, the store would have the right to sue you for a “breach of contract,” meaning that you did not carry out your obligations under the 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).


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

Q: My name is Rhea, I’m 17 years old, and I entered into a gym contract with a local fitness club. The club is saying that I entered into a 12 month contract; even though I’m sure I only entered into a 3 month contract with them. What can I do?

A: Hi Rhea. If your contract says that you can “terminate" the contract if someone breaches (meaning one party does not fulfill their end of the contract), then you can choose to end the contract.  You also have the right in Tasmania to sue the club in court to get back any money you spent unfairly or any other remedy the court may choose. However, before you do this, there are a number of other options you should explore.

You should first tell the club what is going on to try to fix the problem. Try to negotiate with the club directly or file a written complaint with them. If the club is unwilling to negotiate or if you cannot reach an agreement with them, you may also consider filing a complaint with the Office of Fair Trading. Next, you should check the contract to see if it says that a breach entitles you to end the contract. If so, you may end the contract at your option. However, if you decide to continue, or if there is no option to end the contract, you may try to resolve the issue in a tribunal (an informal way of solving disagreements outside of court). 

If none of these options are successful, you have the right to sue the company in court for a breach of contract. In Tasmania, although the club would not be able to sue you in court based on the contract because you are under 18, you are able to sue the club. If you choose to pursue this option, you should contact an adult, your community legal centre, the Office of Fair Trading, 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 my contract?

Q: Hi, my name is Jonah, and I’m 15.  A few days ago I entered into a 12 month, monthly payment plan that allows me access to a news website. I’ve recently come across another news website that is much better and a lot cheaper. Can I get out of the first contract I entered into? 

A: Hi, Jonah.  If the news website is considered a “necessary” item for you (making the contract valid in Tasmania), and if there are no terms in your contract allowing you to end the agreement without penalty, you are bound by the contract.

Not fulfilling your end of the contract will give the other party the right to sue you for “breach of contract,” which means that you did not do what you promised to do under the agreement. 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 plan 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 on 16 April 2015.

 
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