ENTERING INTO A CONTRACT
A contract is a legal agreement between you and the person from whom you are
purchasing goods or services whereby they agree to sell to you those goods or
services and you agree to pay for them at an agreed price or at an agreed rate.
You should always be wary of contracts where you do not know what your final
costs will be, although in some instances costs will vary in the course of the
provision of the works or services so it is not always reasonable for the seller
of the services to give you a fixed price.
However, as far as possible do not proceed without a written quotation
setting out precisely what goods or services are to be supplied to you and what
they are expected to cost.
How do you know you have entered into a contract?
Both you and the seller of the goods or services must intend to make a
legally binding agreement. That is, you must agree to purchase the goods or
services and the seller must agree to sell them to you. There must be an offer
and an acceptance. An offer must be made by one party and accepted by the other.
The offer may be made by you as the prospective purchaser but in most cases
purchases from stores involve you selecting goods which are already marked with
the price on them.
However, merely marking the price on goods does not constitute an offer to
sell. The offer is made by you when you ask the seller to sell them to you. The
contract is made when the seller accepts your offer to purchase the goods. There
is a good reason for this. If putting a price on goods constituted an offer to
sell the goods to you and the goods were mispriced you could accept the
This places sellers at a disadvantage. Contracts may be accepted in writing,
orally or by implication eg: handing over the goods and tendering the money for
the price. However there are many ways of making contracts.
For an offer and acceptance to be valid there must be something known as “consideration”.
Consideration means that each party must give something for what they get. This
normally means that you get the goods and services and the seller gets what you
pay for them.
However, a promise to pay is sufficient to ensure a contract and it is not
necessary for money to change hands. Accordingly, you cannot rely on the fact
that you did not pay for the goods as the basis for saying that there was never
To enter a contract you must have what is known as legal capacity. If
contracts are entered into by persons who are mentally unable to understand what
they are doing, or in some instances for people under the age of 18 if they are
unable to understand the nature of the purchase the contracts will be
unenforceable. However there are circumstances under which people under the age
of 18 can be held to contracts.
Contracts for illegal purposes or illegal goods or services may not be
enforceable. For instance if you purchased a service which involved the seller
committing an offence the contract is unlikely to be enforceable.
However, in some circumstances contracts for illegal purposes may be held to
be enforceable if other penalties are provided and the courts hold that the
illegality is only incidental to the nature of the contract which would
otherwise have been legal. Purchases of illegal goods are usually held to be
The need to have contracts in writing
Where everyday purchases are made at supermarket check-outs and local stores,
it is neither practicable or necessary to provide for a contract in writing and
it is usually the presentation of the goods together with presentation of money
which will be sufficient.
Similarly, many small contracts are verbal eg: Buyer: “May I have a can of
Coke?” Seller: “Yes that will be $1.20" (Offer). Buyer: “Thank you I
will take that”
( Acceptance). However, when larger purchases are involved it is, especially
for services, it is advisable to obtain a contract in writing.
RIGHTS UNDER A CONTRACT
What are door-to-door sales?
When someone calls at your home to try to sell you goods or services this is
known as a door-to-door sale.
Because door-to-door salespersons call at your home without invitation, the
Door-to-Door Sales Act gives you protection which you would not receive if you
buy from a shop or if the door-to-door seller comes in response to your request.
The Door-to-Door Sales Act does not apply to goods and services bought for
business purposes or sellers acting on behalf of charitable organisations.
However, a follow up visit arising from an unsolicited phone call will be
covered by the Door-to-Door Sales Act.
Under the Door-to-Door Sales Act salespersons are not allowed to call except
from Monday to Friday between 9:00am to 8:00pm and on Saturdays between 9:00am
to 5:00pm. Salespersons are not allowed to call on public holidays.
What if I do not want the door-to-door salesperson to visit?
You can ask them to leave and you do not have to allow them into your home.
You are not obliged to buy anything from them. You may ask them why they are
calling and ask them to show you an identification card with their name and the
name of their employer.
What happens if I decide to buy?
What happens depends on whether you buy goods or services worth more than
$50. A written contract is not required for goods and services valued at less
than $50.00. However, the situation is different where:
- goods or services are worth more than $50 or,
- if the contract price is not known when you enter into the contract because
you may have a right to cancel the contract after certain services have been
provided or at any time after a certain date or the contract may be for an
ongoing supply of goods but you may have a right to cancel the contract after
you purchase some of those goods.
In these circumstances, you should receive two notices. One explains your
right to cancel the contract and the other is a notice to complete if you decide
to cancel the contract.
Contracts for goods and services above $50 must be printed or typewritten and
have to include the salespersons full name and address or that of the supplier
of the goods or services, the salespersons signature, the details of any
services performed, the total costs of the goods or services or details of how
the costs will be calculated and a statement immediately above where you sign
which says “This contract is subject to a cooling off period of 10 days”.
There is no cooling off period for insurance contracts or credit contracts.
You must be given a copy of the written contract once you have signed it.
What if I change my mind?
There is a 10 day cooling off period from the day you sign the contract for
you to cancel the contract. During that 10 day period the salesperson must not
accept any money or perform any services for you even if they leave the goods
with you. If you want to cancel the contract you must post or hand the notice of
cancellation to the salesperson or supplier of the goods or services and if
goods have been left with you you should return them or let the salespersons’
supplier know where to collect them from.
You should keep a copy of the notice you send and note the date on which you
posted it. If you lose the notice you can still cancel the agreement by writing
to the salesperson or supplier. You do not have to tell the salesperson or
supplier why you are cancelling the contract.
If the 10 day period has expired you will only be able to cancel the contract
in certain circumstances which involves the salesperson acting properly by
accepting money or providing services before the 10 day cooling off period or
contacting you outside the permitted hours or by harassing you into signing the
When can I return goods?
You can return something for either a refund of the monies you paid, repair
of the goods or replacement of the goods if the goods are defective, the goods
are not what was described by the salesperson or in advertising, both generally
or at the place where you purchased the goods, or you let the salesperson know
why you wanted the goods and the goods are not fit for the purpose you told the
salesperson you wanted them for.
You do not have a right to a refund because you bought goods which are the
wrong size or you changed your mind about the colour or decided you just do not
like the goods any more. Some stores will give you a refund or exchange the
goods for other goods or give you a credit note. They are not obliged to.
What if I return the goods and I only want a cash refund?
If the goods were faulty or inaccurately described or not suitable for the
purpose you made known to the salesperson you can insist on a cash refund and
you do not have to accept a credit note even if the store has a “No Refund”
Do not be deterred by no refund signs as no refund signs only apply if you
bought the wrong size, colour or changed your mind. They do not apply when the
goods are faulty, improperly described or not fit for the purpose which you told
the salesperson you were buying them for.
How long can I keep the goods for before I demand a refund?
This depends upon the nature of the goods. For instance it may be considered
unreasonable to purchase an article of clothing to wear and wash it numerous
times and then to ask for a refund because stitching comes loose or the like.
Each case needs to be decided on its merits but there is a difference between
a defect and fair wear and tear. The nature of fair wear and tear depends upon
the type of good purchased and the use to which it is put. It also depends upon
the type of materials of which the goods are made.
In some cases goods may need small repairs. If the seller is able to make
those repairs without difficulty, the seller may be able to insist on repairing
the good rather than replacing it.
I THINK I’VE BEEN RIPPED OFF
Certain trading practices are prohibited by State and Commonwealth
legislation. The State legislation in Western Australia is the Fair Trading Act
1987 and in the Commonwealth the legislation is The Trade Practices Act.
Unfair trading practices can include misleading or deceptive conduct,
unconscionable conduct, selling goods which are not fit for the purpose for
which they are sold, selling goods which fall short of the way they are
described or are not as good as the sample shown. The same applies to services
which are not rendered with due care and skill.
The Fair Trading Act and Trade Practices Act also prohibit sending
unsolicited credit cards goods and services and certain types of trading schemes
such as pyramid selling schemes.
Misleading or deceptive conduct
Misleading or deceptive conduct is conduct which may lead you to believe that
goods or services have certain characteristics or attractions which they do not,
or lead you to draw conclusions that are inaccurate. You do not have to prove
that the conduct was deliberately intended to misled or deceive you. It is
sufficient that a reasonable person would have been mislead or deceived by such
Suppliers and advertisers of goods and services cannot claim that those goods
and services have standards or qualities which they do not, are endorsed by
persons or organisations when those persons or organisations do not endorse
those goods or have uses or benefits which those goods do not have.
They are also not allowed to make statements about the place of origin of
goods or services which is false or misleading. They cannot accept payment for
goods and services if they intend to supply goods or services which are
different to that which it was intended they would supply.
When one party who is a stronger position to the other in a transaction and
takes advantage of that position the actions of the stronger party may be held
to be unconscionable conduct in trade and commerce.
Some persons have however a significant disadvantage because of factors such
as age, mental capacity, limited understanding of written or spoken English and
the like. When the stronger party knows or should have realised that the weaker
party did not fully understand the transaction but proceeded with the
transaction anyway such conduct may be seen to be unconscionable conduct.
Some forms of coercion or harassment in the use of sales techniques which
lead to one-sided contracts may be viewed as unconscionable conduct.
Pyramid selling schemes
If you are invited to enter into a trading scheme in which you pay money to
participate in the scheme and receive benefits in money or goods for recruiting
other participants to the scheme and the scheme operates mainly to recruit new
participants this scheme may be a pyramid selling scheme which is illegal. These
schemes are outlawed because in many circumstances most people who participate
in the scheme lose their money and very few benefit.
Who is responsible if the goods are damaged when the goods are being
If you purchased the goods and made your own arrangements for delivery the
seller will not be liable if you damage those goods whilst transporting them
yourself. However, if the seller arranges delivery for you it is the seller’s
responsibility to deliver the items in good order and any damage in transit will
be the seller’s responsibility.
When the goods are delivered you should inspect them to ensure that they have
been delivered in good order. If you are not home when goods are delivered to
your home you should make some arrangements for someone to be present to collect
If you or no-one else is home the seller may return the goods to the store
and charge you again if a further delivery has to be made.
What if I or my children damage goods in the store?
You will not necessarily be liable for every circumstance by which goods are
damaged. If goods which are easily broken are left in high traffic areas,
protruding from shelves or otherwise placed where it is likely that the goods
would be damaged by normal everyday shopping use, you may not necessarily be
required to pay for the replacement cost of the goods. However, if you or your
children pick up goods or knock goods over and damage them you may be held
liable for their replacement cost.
SHOPPING ON THE INTERNET
The Internet has become very attractive to shop because you have access to a
wide range of goods and services. You can browse and purchase when you want to
and in some instances you can purchase direct from suppliers rather than through
However before purchasing on the internet you should consider the following:
- You are not physically able to inspect the goods and the goods may not be of
the quality represented on the website.
- Whilst you are able to purchase on a world-wide market it may be difficult to
obtain after sales support servicing, warranty, replacements and refunds.
- You do not necessarily know whether you are dealing with reputable persons who
will actually supply the goods you order.
- You will be required to make payments providing credit card details.
- Information you supply may become widely available to others.
The things I should look for
Sometimes it is advisable to ring or e-mail to follow up about the goods or
services to be provided. Make sure the sellers give proper contact telephone
numbers and address numbers including a physical address that you can reach the
business at later. Do not rely upon post office box addresses.
Check out more than one shopping site for the goods you want before making a
decision. Often special or limited offers are available on more than one site
and available for longer periods than stated.
Find out how the goods are to be delivered, what the delivery costs are
likely to be and whether the goods will be subject to any sales tax, import duty
and the like.
Find out what the goods will cost in your own currency. Find out when the
goods or services will be delivered and what the seller’s policy is on
Note that it may be illegal to import some goods from overseas into
Using your credit card
Check whether the seller has a secure payment system and if not, arrange to
give your card number by telephone or mail. Do not give bank account details as
you will risk unauthorised withdrawals. Print out your purchase details and keep
With credit card purchases check your monthly statements to see you have been
charged the agreed amount and if you dispute the charge complain to your credit
card provider immediately.
This Information Outline is provided courtesy of Dwyer Durack Barristers
& Solicitors who are experienced in this area of law. They are located at
Dwyer Durack House, 40 St. Georges Terrace, Perth, WA 6000 or call them on (08)
9325-9277 if you would like more information on the legal topic, or you wish to
obtain formal advice regarding you situation.
Established in 1914, Dwyer Durack is one of Western Australia's most
respected and progressive law firms. It is the leading legal firm in Western
Australia for the provision of a comprehensive service in the private client
areas of personal injuries, family law, employment law, criminal law, consumer
law and wills and estates. The firm comprises 13 Partners and a total compliment
of 120 personnel. Dwyer Durack is a member of the Australia-wide PeopleLaw