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Contract Law

Overview

ContractAustralian 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 in hte 'Contract law' tab, above.

 

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:


Scope and content

A contract is generally only enforceable by and against parties to the contract.

There are also rules to determine the terms of the contract, their meaning and their classification. There are also some special rules relating to exclusion clauses - those clauses that seek to reduce or remove liability for certain conduct.

Avoidance of contract

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.