What is a contract

A contract:

  • is an agreement between two or more parties
  • is legally binding
  • can be written, verbal, or both
  • has terms and conditions.

A contract is created when a party makes an offer and the other party accepts it.

You can enter a contract by:

  • signing a document
  • taking something from a store shelf and paying for it at the check-out counter
  • posting a letter of acceptance
  • clicking an ‘I agree’ button on a web page.

Some contracts must be in writing (for example, a contract to sell land or a lay-by contract).

The terms and conditions of a contract make up the agreement of the parties, and their rights and responsibilities. The terms can be either:

  • spelled out (set down in writing or expressed verbally)
  • implied (either by law or as necessary to make sense of the agreement).


  • It is important to always read contracts carefully before signing
  • Contracts are legal documents. Ask questions and get advice
  • Keep copies of documents or anything signed
  • NEVER sign a contract you do not understand
  • Say NO if you feel pressured.

Contracts for products, services, or the sale or grant of interest in land, must comply with the Australian Consumer Law (ACL). These are called standard form contracts, which:

  • have been prepared in advance for consumers to sign
  • give an offer on a ‘take it or leave it’ basis
  • the terms are not negotiated with consumers.
Updated: 16 Aug 2022

This page has been produced and published by the Consumer Building and Occupational Services Division of the Department of Justice. Although every care has been taken in production, no responsibility is accepted for the accuracy, completeness, or relevance to the user's purpose of the information. Those using it for whatever purpose are advised to verify it with the relevant government department, local government body or other source and to obtain any appropriate professional advice. The Crown, its officers, employees and agents do not accept liability however arising, including liability for negligence, for any loss resulting from the use of or reliance upon the information and/or reliance on its availability at any time.