A binding contract can be verbal, in writing or electronic. You can only cancel a contract in certain situations.
You enter a contract every time you buy, hire or lease products or services — or click on an 'I agree' or 'I accept' button online.
Making a contract involves three basic steps:
The contract is formed when you tell the seller you accept the offer. You must also both intend to make a legally binding contract.
Contracts can be in writing, verbal or electronic.
A standard form contract is an agreement in which the terms haven't been negotiated, e.g. the agreement is offered on a take it or leave it basis. The terms can be in a separate document, or on the back of things like tickets, quotes, terms of trade or invoices.
Standard form contracts are common, e.g. rental car agreements, gym memberships, TV subscriptions, gas and electricity contracts, finance agreements and retirement home contracts.
Negotiated contracts involve you and the seller negotiating terms before agreeing to the contract, e.g. if you buy a car but make the purchase conditional on mechanical checks. They are less common for consumer products and services than standard form contracts.
A verbal contract is binding as soon as you accept an offer from a seller, or as soon as a seller accepts your offer.
Electronic contracts are made by email and online forms (e-commerce) and social media, e.g. Facebook (f-commerce). They are all legally binding as long as they are validly made.
Quotes and estimates are statements about the price of the product of service, with rules for both you and the provider. Read about your rights and responsibilities:
Vanessa books a service for her car with the local garage. On the booking form it states that if she cancels on the day of the booking, she’ll be charged a $250 cancellation fee. Unless the garage can justify this cancellation fee as a reasonable estimate of the loss it would suffer for that cancellation, it is not enforceable as a penalty.