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Contracts

Western 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.

 

What is a contract?

Can I enter a contract if I'm 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, my name is Jessica from Western Australia and I’m 15 years old. My mum has promised to buy me a horse for my 16th birthday. Is this a legal contract that will hold up in court if she changes her mind? Do I need to get her to write it down on paper? What exactly is a contract?

A: Hi, Jessica. Whether your mum’s 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 mum in return, then you may have a contract.

A contract is an exchange of promises between two or more people that a court will uphold i.e. a legally binding agreement. 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 horse as your birthday present). 

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 buying you a horse). 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 Jake. I’m 17 years old and want to enter into a contract to start renting an apartment. Can I enter into the contract even though I’m not yet 18? 

A: Hi, Jake. In Western Australia, you may sign the contract and both parties will be bound by the contract as long as the transaction is for your benefit and not unfair to you.  The other party to the contract may want a parent’s signature as well as your own in order to “guarantee” the payment. If the contract falls outside what is considered to be for your benefit you can affirm the contract once you turn 18 and you will then be legally bound.

In Western Australia, people under the age of 18 are bound to contracts, leases, and other transactions only if the contract is for their benefit.  So you will not be bound by unfair or exploitative transactions, but you may enter into and be bound by an ordinary transaction that you choose to enter into and that is for your benefit (like renting a flat or buying something).

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 fulfill their half of the bargain. In Western Australia, this makes the person giving the guarantee responsible for the contract if the person under 18 cannot fulfill the contract.

 

What happens if I don’t follow through with my end of the contract?

Q: My name is Blake, I’m 17 years old, and I signed a contract yesterday to buy a car in Western Australia, but have found a similar car that’s cheaper and don’t want to go through with the contract. What rights does the car dealership have against me?

A: Hi, Blake. Assuming that the contract is valid in Western Australia because the car purchase is for your benefit, the dealership may have the right to sue you for a “breach of contract,” meaning that you did not fulfill your end of the bargain.

If you do not fulfill 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, (because the contract was not for your benefit and wasn’t affirmed), 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.

Examples of contracts not for your benefit would include contracts to purchase goods or services that are bad for your health or wellbeing, or a contract with terms that are unfair (like a term that severely punishes you, but not the other party, for not completing the contract). You may also contact Consumer Protection in the Department of Commerce if you are dealing with a consumer contract, like a purchase agreement.

 

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

Q: My name is Rob, I’m 17 years old, and I bought a gym membership with a contract trainer at a gym. The trainer took the money from me in advance, but now doesn’t want to train me and has stopped returning my calls and messages. What can I do?

A: Hi, Rob. As a young person under 18, the law in Western Australia says that you can enforce a contract that you have entered into . 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 sue the trainer in court to get back any money you spent unfairly or any other remedy the court may choose.  However, before you do this, there a number of other options you should explore.

You should first tell your gym about what is going on to try to fix the problem. Try to negotiate with the gym directly and/or file a written complaint with them. If the gym is unwilling to negotiate or if you cannot reach an agreement with them, you may also consider filing a complaint with Consumer Protection in the Department of Commerce.

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). 

Should these options not resolve the issue, you may choose to sue the trainer in court for a breach of contract. If you choose to pursue this option, you should contact an adult, your community legal centre, Consumer Protection in the Department of Commerce, 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, and/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 Sarah. I’m 14 years old and entered into a contract to buy a 12-month magazine subscription in Western Australia yesterday, but now I’ve realised that it will be too expensive. Can I get out of the contract?

A: Hi, Sarah. The general rule in Western Australia is that a person under the age of 18 years is not bound by a contract unless he or she affirms the contract when they turn 18. There are exceptions to this rule for contracts that are considered to be for a ‘necessity’ in life such as food or shelter. The other party to the contract must be able to show that the thing contracted for was beneficial to the young person.

Sarah, it would be unlikely that a magazine subscription would be considered a necessity. It may be a good idea to talk to your parents or a trusted adult and ask them to help you to draft a letter to the company explaining that you are under 18 and cannot afford the subscription.

Generally, if there are no terms in your contract allowing you to end an 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 something 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. If entering into a future contract be sure to read the terms 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 can 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 and/or written notice. Written notice may be preferable in case you need to prove that you ended the contract.

We hope this helps you Sarah.


This page was last updated 16 April 2015.


 
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