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Contracts happen every day in life. For many contracts you probably won’t even know you’ve entered into one. For example when you go to the corner store to buy a litre of milk – that’s a contract. Below you’ll find answers to some frequently asked questions that we’ve received. If you have a question about mobile phone contracts or rental agreements you can find more information on our Renting and Mobile phone pages, or, if you have a question that we haven’t answered, please contact us here.

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What is a contract?

Q: Hi, my name is Nabih, for my 18th birthday my parents promised to buy me a car, and even gave me a picture of the one they were going to get for me. Is this a contract that I could enforce?

A: Hi, Nabih.  Whether your parents promise is a contract will depend on a few key facts.  If you both wanted the promise to be a contract, and if you made a promise to your parents in return, then you may have a contract.

A contract is an exchange of promises between two people that a court will uphold. This makes a contract different from a gift.  A gift is one person’s promise to give something to another person.  A court will not uphold a promise to give somebody a gift.  There are a few things that are needed to have a legal contract.  

First, you need an offer (that is, an offer to give something or to pay for something, like a car).  Second, you need an acceptance of the offer.  

Third, you need “consideration.”  

Consideration means that each party to the contract is making a promise to the other party to exchange something of value (like if you promised you would pay for the registration of the car in exchange for them paying for the car). Also, both parties must want to enter into a contract and expect the agreement to be upheld by a court.  

In most situations, a contract does not have to be in writing or “witnessed” (when someone who is not a party signs onto the contract to prove that it is trustworthy).  That means you may enter into a contract with only spoken words or even actions such as giving you a picture of the car. However, it is always a good idea to have a written contract because misunderstandings are less likely and you may later prove to a court what the contract says.

Can I enter into a contract if I’m under 18?

Q: Hi my name is Paul; I want to buy my own phone because my parents will not get me one. I’m 16 and have a job so I know I can pay for it. I went in to talk to a worker at Vodafone on the weekend and was looking at a contract that would only be $30 a month which I can afford. Am I able to enter a phone contract even though I’m not 18 yet?

A: Hi Paul,

Under Australian law young people under 18 years are classified as minors and they are not usually liable for contracts they sign.

The law in ACT says that where a person under 18 signs an agreement for “necessaries” (eg food, clothing, shelter, accommodation or education) they are liable to pay a reasonable price for what they get. It is unlikely that an agreement with a mobile phone company would be seen as a “necessary” and this means that any contract you may enter into with a mobile service provider is void and unenforceable. This is because the law is trying to protect people under 18 from entering into a binding agreement they do not fully understand. Because of this you may find that it is difficult to find a mobile phone company who will agree to enter into a contract with you.

If your parents became a ‘guarantor’, that is they sign the contract for you and state that you will perform your obligations under the phone contract, you may be able to enter into a phone contract. This would make your parents liable to the terms of the contract. You would need to talk to your parents about this option, how you are willing to pay for the phone and how you plan to keep to the terms of the phone contract.

If you aren’t sure whether you can enter into a contact in your situation, please contact us here.

What happens if I don’t follow through with my end of the contract?

Q: Hi my name is Laura, I’m 17 years old and signed up for membership to a swim club that trains weekly. They take money from my account every two weeks. I’ve just had to pay back my parents for a trip I took and now I don’t have the money in my account to pay for the membership. I am already late on one fortnightly payment, what if I can’t pay the next payment in time as well? Will I be breaking the terms of the contract?  

A: Hi, Laura.  The contract is likely to be invalid in ACT because a membership with a swim club is unlikely to be considered “necessity” to your way of life and is not a beneficial contract of employment. The swim club will not be able to get a remedy from the court based only on your breach.

If the swim club tries to enforce an invalid contract against you, you should contact them and try to negotiate a solution.  You may want to ask to cancel the contract or ask if you can pay the cost in instalments that you can afford.

If this does not work, you may send them a written complaint explaining why the contract is improper and that you should be able to get out of it.  You also have the option of contacting the Office of Regulatory Services to complain if the swim club is unresponsive or continues with its action against you.

If the contract was valid and you did not fulfil your end of the terms, the swim club may be able to sue you for a “breach of contract,” meaning that you did not carry out your obligations under the contract.  This would be difficult for them however, given that you are under 18. The court will decide what happens, but some options include:

  • awarding a sum of money to the other party (“damages”)
  • ordering you to do what you originally promised to do under the contract (for example, to pay a certain amount of money for goods or services you received)

If you want specific advice on this topic, please contact us here.

What happens if the other party doesn’t follow through with their end of the contract?

Q: My name is Charlie, I’m 15 years old, and I just signed up for a contract to get Netflix for my TV in my room. They changed their rates without telling me, which is against the terms of the contract.  What can I do?

A: Hi, Charlie. If your contract says that you can “terminate” the contract if someone breaches, then you can choose to end the contract.  You also have the right to sue the Netflix provider in court to get back any money you spent unfairly or any other remedy the court may choose.  However, before you do this, there a number of other options you should explore.

You should first tell the Netflix provider what is going on to try to fix the problem.  Try to negotiate with the company directly or file a written complaint with them. If the company is unwilling to negotiate or if you cannot reach an agreement with them, you may also consider filing a complaint with the Office of Regulatory Services.  

Next, you should check the contract to see if it says that a breach entitles you to end the contract.  If so, you may end the contract. If you decide to continue, or if there is no option to end the contract, you may try to solve the issue in a tribunal (an informal way of solving disagreements outside of court).  Finally, you have the right to sue the Netflix provider in court for a breach of contract.

If these options do not solve the issue, you may choose to sue the Netflix provider in court.  If you choose to pursue this option, you should contact an adult, your community legal centre, the Office of Regulatory Services, or Legal Aid to help you through the process.  You may then be entitled to a number of remedies, including:

  1. i) awarding a sum of money to reimburse your losses (“damages”),
  2. ii) ordering the other party to stop breaching the contract, or
  3. iii) ending the contract and ordering the other party to pay damages.

We hope this information helps you Charlie.

If you have a question about a contract that you have entered into (for example online shopping) or about contracts in general, please contact us here.

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