Australian contract law

Australian contract law concerns the legal enforcement of promises that were made as part of a bargain freely entered into, forming a legal relationship called a contract. The common law in Australia is based on the inherited English contract law, with specific statutory modifications of principles in some areas and the development of the law through the decisions of Australian courts, which have diverged somewhat from the English courts especially since the 1980s. This article is an overview of the key concepts with particular reference to Australian statutes and decisions. See contract law for very general doctrines relating to contract law.

At common law not all promises were enforceable. One way in which a promise is enforceable is the modern law of contract, which arose from the old action of assumpsit, and concepts of motive and reliance. In Australia, the bargain theory prevails, under which the exchange of promises, referred to in the Latin term quid pro quo, is an essential element. A promise made under seal was enforceable under the old action on the covenant, which has developed into the modern law in relation to deeds. Promises may now also be enforceable as negligent mis-statement,promissory estoppel,misleading or deceptive conduct in breach of the Australian Consumer Law. In Australia, the law of equity has also played an increasing part in changing the laws regarding contracts, and the remedies that may be available when contractual promises are breached.

There are five essential elements necessary for legally binding contract formation:

The absence of any of these elements will signify either that there is in law no agreement or that the agreement is not enforceable as a contract.

In most jurisdictions contracts do not need to be represented in writing and oral contract are as enforceable as written contracts. However, there are a number of exceptions that have been created by statute follow from the Statute of Frauds 1677 (UK) and were principally designed to reduce fraud. Examples are marine insurance which is not enforceable unless it is documented in writing. Also consumer credit must be documented in written form with a copy provided to the consumer. Similar formalities are required for the sale of land. The courts however will intervene so that the Statute of Frauds is not made an instrument of fraud.

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