Content and interpretation of Contracts The vast majority of the contracts pose no problems - they are usually a simple interchange of cash for goods/services - but when they go wrong it can become very complicated and potentially costly. This is less likely to occur when the parties to the deal (contract) understand what they are doing, what their rights and obligations are, and how to recognise potential problems.

Basic needs to form a legally binding contract. In order for a contract to be valid certain requirements must be met: The two main aspects, which must be present in any contract for it to be binding, are offer and acceptance. One party must make an offer that the other, clearly and unmistakably, accepts. They then have a binding contract

Common law has developed six fundamental principles needed for a contract to be legally binding. These are: 1. Agreement - where one party makes an offer and the other accepts it; 2. Consideration - where one party gives something in exchange for something from the other party; 3. Intention - where both parties intend to abide by the contract; 4. Capacity - where both parties are mentally capable of understanding a contract;

5. Genuine consent - where both parties agree to the contract of their own free will; and 6. Legality - where all are in Agreeance

Written or Oral Some contracts must, by law, be in writing, such as insurance contracts and contracts for the sale of land. Otherwise, verbal contracts are not only acceptable but form the largest proportion of the thousands of contracts satisfactorily completed every day. A simple, one-off exchange of goods or services can usually be dealt with verbally without problems, whereas a contract that involves multiple dealings or that continues over a long period should usually be in writing for everyone's benefit.

The problem with a verbal contract People are forgetful, especially over time. People may either deliberately or accidentally forget what they have agreed therefore if there is no written record of contractual terms it becomes a case of one party’s word against another partys word.

Express and implied terms A contract may consist of terms which a parties agree on expressly and those which are implied into their agreement. When looking at any disputes both express terms and those which are implied (I.e.whether through particular circumstances or the nature of the transaction or their conduct) are reviewed by the courts.

Express Terms Express terms are those that have been discussed or noted (I.e. Party A will supply 1000 Eucalyptus marginata seedlings to Party B). Express terms can be wholly oral, wholly written or a combination of the two. Express terms may be contained in one document or may be in associated documents, memo, addendums etc.

Implied Terms Implied terms are such terms as those which may be provided for under statute (ie Trades Practices Act 1974 (Cth) or the Sale of Goods Acts which apply in each state (minimum wage, Minimum work age, Minimum working arrangements – I.e. 13 days on 1 day off)

Relative Importance of Terms Once the terms of a contract are established the next step is to decide what precisely was meant by the term. Some terms are fundamental in importance – I.e. if not fulfilled or honoured it goes to the very heart of the transaction, others are less vital. For instance where Party A was to provide 1000 Seedling the provision of 1000 seedlings is fundamental. The delivery (I.e. in two batches of 500 seedlings or 4 batches of 250 seedlings may not be so vital)

Likely Disputes Remember Disputes of contract law will most likely be in relation to a contract where elements of agreement, consideration and legal intention are no issues but where a dispute has arisen about exactly what one party’s rights or obligations are following some disagreement about what was actually agreed, or claimed non performance by one of the partys.

Content of a contract (written) On a structural level certain features are present in most contracts Understanding what a contract is typically comprised of reduces the risk that something of importance will be excluded.

A Cover Page: Not necessary however does improve presentation Will normally have the name/title and contract number for the contract Subject matter of the contract may be briefly described (e.g. supply of Eucalypt seedlings) Name of the parties to a contract Contact details for key personnel

Index: Not strictly necessary Provide a list of the contents of the contract Allows particular clauses to be located Contract Outline: List the purpose of the contract Discuss the goods / services etc in question Factual background/recitals to the contract

Terms of the Contract: A list of the terms are provided Terms are typically broken up into separate clauses Where possible each subject matter should be separated into a separate term Each clause should have a heading which describes briefly what it deals with

Definitions: Definitions for certain words and phrases are given (I.e. where it could have a number of meanings) Standard Clauses: It is common for a contract to include regularly covered clauses

Cross References: There may be a reference in one clause to something which is described in another clause Schedules and Annexures: Schedules and annexures often form part of a contract usually towards the back of the document. Where these are not included in the main document a clause which indicates the documents inclusion in the contract should be included.

Signed Pages There may be one or several parts of a contract that the parties (or authorised representative of the party is required to sign) Some contract will also require initials of the authorised representatives against certain terms and or clauses.