What makes a contract enforceable?
In relation to what makes a contract enforceable, We’re often presented with situations where our clients feel that they have an enforceable agreement, but are not quite certain whether their situation meets all of the legal requirements.
Whether an agreement is enforceable is a very important issue that is rarely taught at school so let me run through a quick summary.
The parties to a contract must either be over 18 years of age or a registered company. Where a trust is involved the trustee of the trust is the contracting party. In some rare situations, a minor (i.e. a person under 18 years of age) may enter into a legally binding contract, however these situations arise infrequently.
As we’ve discussed previously, a contract can be in writing, verbal or a combination of both. Even so, we always recommend putting any agreement you have with someone in writing. By doing so, both parties have certainty about their rights and obligations to each other. If you need to enforce a contract, it is much easier if it has been set out in writing. And remember that in Queensland, a contract that involves the sale of land must be in writing in order for the contract to be enforceable.
The law of contract has developed over many centuries but it essentially boils down to whether three primary elements are evident: They are:
- There must be an agreement, which needs someone to offer something, and the other person to accept that offer.
- Each party to the contract must give the other something of value as part of the arrangement. That is, both parties must benefit from the deal. This is what lawyers refer to as “consideration”. This might be money, a product, machinery etc or someone’s time and skill.
- Each party to the contract must willingly intend to be bound by the agreement. This doesn’t mean you have to say “I intend to be bound by this contract” but there does need to be some clear intention to be bound by the deal. Signing the document or taking steps to carry out the obligations under the contract is good evidence of this.
If your situation includes these elements then it is likely you have a contract which we can help you enforce if the other party is not doing what they agreed to do.
If you still aren’t sure as to what makes a contract enforceable in your particular situation we strongly recommend you contact us as soon as possible for advice as to whether you have an enforceable contract.