How do you know if you have entered into a contract?

How do you know if you have a legally binding contract? Or how do you know if you’ve entered into a legally binding contract? Interesting. Well, stick around and I’ll tell you.

Hi everyone, Simon here from The Contract Company, contracts is what we do all day every day and sometimes at night. I know, lucky us and lucky me.

Right out, how do you know if you’ve entered into a legally binding contract? Well, I can cut to the chase on this one. If you’ve signed something, it’s more likely than not that you’ve entered into a contract.

Obviously, you can’t enter into contracts for things that are illegal. So, silly but basic example, you cannot enter into a contract that says, “I will kill someone for so many dollars.” Because obviously murder and killing people is illegal.

So as long as the contract that you’ve signed is not for anything that’s illegal, it’s more likely than not, in fact, it’d be 95% likely that you’ve entered into some sort of contractual relationship.

There are certain legal requirements for a contract to be formed. Was an offer acceptance, consideration? All that sort of thing.

How do you know if you have entered into a contract?

But cutting it short, because this video is only going to be short, if you’ve signed something, I’d say you’ve entered into a contract.

The other area where it can get confusing is that if you haven’t signed a contract, let’s say someone gave you a contract to sign, let’s say an employment agreement, and you never actually signed the employment agreement but you turn up for work and you start working, well, that means there is a contract on foot.

It’s just that that contract, it’s not in writing. It’s a verbal contract. And verbal contracts in Australia are legal.

The issue you have with them is trying to prove what the terms are, i.e, what are the terms and conditions? What’s the salary? Whatever it is.

That’s why it’s always best, in commercial arrangements, to always have the document set out, in writing obviously.

What are the terms of the deal? Otherwise, if you enter into some sort of verbal arrangement, well, then it just becomes a case of he said this or he said that.  And who knows what’s on foot or what the agreement is between the parties?

One other area of law where it can get slightly complicated, and we found this actually to our favor, is that if someone signs a deed and the deed is not signed and executed properly, then more likely than not that the deed did not come into existence.

And we managed to get someone out of a deed that they had signed, and get it reversed, renegotiate a new contract and get them an extra $20,000 simply because we were able to find that thread that the deed had not been, in this case, witnessed properly in a relevant jurisdiction.

And that actually meant that the deed was dead. Now, deeds are formal versions of contracts. I won’t go into the specifics about those. Whereas a standard contract can just be accepted by conduct.

In Conclusion

So, back to the original question, how do you know if you’ve entered into a contract? If you’ve signed something or acted in accordance with a certain course of conduct, you’ve probably entered into a contract. Hope that helps.

If you have any questions about this video or in general, please feel free to get in touch with us. Simon@contractcompany.com.au, or 1800-355-455. Thanks very much.

Feel Free to Contact us

  • This field is for validation purposes and should be left unchanged.