No, a lawyer is not necessarily required to draft a contract. However, a lawyer can help you by drafting a contract with careful wording, one that minimises the risk of contract breaches by ensuring each party is aware of its rights and responsibilities. An ambiguous contract can be open to several interpretations and the consequences can potentially be disastrous.

Contract law is a complex area of law, and you should protect your interests with a well-drafted contract. Call Gibbs Wright Litigation Lawyers for a free and confidential consultation about your contract matter.

An agreement is an arrangement or understanding reached between parties where there is no intention to be legally bound.

A contract is a specific agreement that has elements that make it legally binding and enforceable by a court. There is an intention, either express or implied, to be legally bound. The essential elements of a contract are:

• offer and acceptance — an offer is made by one party and accepted by the other party;
• consideration — something of value is exchanged for a promise;
• intention — the parties must intend to make a legally binding agreement; and
• capacity — the parties must be capable of entering into the contract.

A contract lawyer should review your contract because the document is the key to your business success.

It is vital that your interests are protected and that each party to the contract has clarity about their rights and responsibilities.

There can be serious legal consequences for a party that fails to keep its promise.

Contractual disputes can arise in a range of circumstances and can involve:

• building contracts — boundary miscalculations, unreasonable delays, additional costs of materials;
• commercial agreements — lack of confidentiality, misleading information;
• employment contracts — discrimination, unfair dismissal, stand downs;
• franchise contracts — projected profits not materialising, lack of advertising rights for a franchisee;
• government contracts — licensing requirements, onerous development conditions;
• joint venture agreements — profit-sharing disagreement, undisclosed expansion plans;
• loan agreements — excessive fees and charges, unauthorised transactions;
• partnership agreements — partner underperformance, competing interests;
• shareholder agreements — bankruptcy, fraud, withholding of dividends; and/or
• sponsorship agreements — ethical concerns, unreasonable expectations.

The above are only some of the different kinds of contract disputes and reasons they may occur. As it is a complex area of law, there are many other kinds of contract disputes.

A breach of contract is when a party to the contract fails to abide by a term that is written or implied in the contract. A breach usually occurs through:

• a failure to perform on time;
• a failure to perform to an agreed standard; or
• a refusal or inability to perform at all.

There are four main types of contract breaches:

1. Material — when a party receives significantly less (or a significantly different result) than what was stated in the contract. Damages can be sought for both direct and indirect consequences of the contract breach.
2. Minor — when a party fails to fulfil part of an obligation. Damages can be sought only if the non-breaching party can prove the breach caused financial losses.
3. Anticipatory — when a breach has not occurred but a party has indicated that it will not fulfil its obligations under the contract. One party can notify the other party or a claim can be based on actions which suggest a party does not intend to deliver.
4. Actual — when a party has either refused to perform its obligations by the due date, or performed them improperly or incompletely.

The type of remedy available depends on the type of contract, the scale and severity of the breach, and whether the contract contains any clause for dealing with a breach. Remedies include:

Damages
The court can award damages (money) to compensate the innocent party for loss suffered due to the breach. The amount of damages to be paid can be specified in the contract (liquidated damages) or otherwise decided by a court (unliquidated damages).

Injunction
A court can order an injunction to restrain a person from breaching, or continuing to breach, a contract.

Specific performance
This kind of court order directs a party to perform their contractual obligations. This order can be made when the damages awarded are not adequate compensation.

Termination
A court can order that the contract be terminated and that the party in breach restore the innocent party to the position it was in before the contract was signed.

Yes. There may be defences available to a person or business accused of breaching a contract which could avoid or limit any liability. Whether a defence applies will depend on the circumstances of the case.

Common defences include:

• mistake of fact;
• incompetency;
• unconscionability;
• duress;
• undue influence; and
• misrepresentation.

Contrary to popular belief, a contract does not need to be in writing — it can be verbal.

A verbal contract will be valid if it can be established that it has all the essential elements of a contract:

• offer and acceptance — an offer is made by one party and accepted by the other party;
• consideration — something of value is exchanged for a promise;
• intention — the parties must intend to make a legally binding agreement; and
• capacity — the parties must be capable of entering into the contract.

It can be difficult to prove that a verbal contract exists and what its agreed terms are.

Verbal contracts should be avoided. If a verbal contract is made, the terms should be confirmed in writing in case they need to be enforced.

A contract may be unenforceable for reasons such as:

• it violates public policy, for example a contract to sell illegal drugs;
• it involved duress or undue influence;
• a party did not have capacity to enter the contract, for example the person was a child or had a mental impairment;
• one party or both made an honest mistake;
• it is unfair due to unconscionability, for example there was no room for one party to negotiate; or
• one party used a misrepresentation or false statement to induce the other to enter the contract.

If you’re involved in a contract dispute, it is recommended that you seek legal advice. You can do so by calling Gibbs Wright Litigation Lawyers for a free, no-obligation consultation about your legal rights and options.