Australian contract law encompasses the laws and regulations that are directed towards the enforcement of the certain promises. Creating a legal relationship between the two or more parties is known as a contract. English contract law, is the base of common law in Australia, but there are some of the amendments made to the principals in some specific parts along with the development of the laws per the permission of the Australian courts.
How the Contract Formed?- Some of the elements plays vital role in the formation of a contract.
- The first and the main point is agreement between both the parties.
- Next is consideration, where the bargain about money supply, property or services works on the exchange of something valuable.
- Required sound mind or legal age as basics of contract.
- Parties’ intention to be in legal relations having entire agreements and biding contracts.
- Certainty to have complete, clear and biding.
If any of the point is missing, there might be issue with the contract.
Agreement- The agreement between the parties is analysed through the rules for acceptance and the offer. This makes sure the both parties are willing to be bound by certain terms. An offer shows the intention of the party and need to be bound for further negotiation and discussions. In some cases, a contract can be created by the identified acceptance and offers the parties with mutual assent.
Consideration- The vital role, in a contract played by the consideration. The promises of the contract will only be enforceable if there is consideration as the support. Money, any witness or any of the particular act can be the consideration. In Australian Law, having a sufficient consideration not just indicates adequate amount as one can’t decide whether the consideration is apt or not. The apt consideration means, including abstract exchanges like love and affection. Here the consideration means the promise is there is the return of the promise.
Capacity- Contractual capacity means the party’s ability to take part in the legal binding contract. Some who don’t possess the adequate capacity includes drunks, minors and the mentally impaired people as they are not presumed by default for having the capacity of having contract.
Intention- Another element is that the parties must have the intentions of having the legal relations. Having that is required for the commercial arrangements and to having legal consequences as well due to social as well as domestic agreement’s requirement of preliminary agreements arouses when the parties enter into the arguments. In case, any of the parties further denies continued the agreements, then the question raises and then the first agreement is there to be enforceable. There may be three further possibilities as well.
- The parties are bound to bargain as soon as possible, but can restate the deal in a formalized contract so that no other effect would be there.
- Parties are intended to be bound immediately and there term performance is suspended by the time intention is created through legal documentation conclusion.
- Parties are not intended to be immediately bound if the contract is not signed.
Certainty- The agreement should be certain, but still having three major problems:
- The argument may be incomplete when the parties are not able to reach the argument on the essential elements.
- The agreement can be uncertain because of too vague or ambiguous terms.
- Having the particular promise that is illusory and so would have the discretion to perform the promise.