Contract Law Part 1 : An Overview for Schools
As a principal, you frequently enter into contractually binding agreements. Some are obvious and some are subtler. It is important to be aware of what types of agreements constitute a legally binding contract and what to do when you feel a contract has been breached. This article is part one of three on an introduction to contract law.
Elements of a Contract
Not every agreement is a legally binding contract. There are agreements we enter into every day, whether honoured or not, that have no legal enforceability. For an agreement to be a contract it must, generally speaking, satisfy the following elements:
- There must be an offer.
- There must be acceptance of that offer.
- There must be an intention to create a legally binding agreement.
- There must be a price paid. This can be money but the benefit is not limited to money.
- The people entering the contact must have legal capacity to enter the contract.
It is also essential that the people entering the contract:
- are entering the contract out of free will; and
- have a proper understanding of and consent to what is involved;
- are not agreeing to something that is otherwise illegal.
If the contract doesn’t meet these requirements it could be invalid, void or illegal.
What does it mean to make an Offer?
An offer can be made to one person, to a group of people or to the world at large. It is, therefore, necessary for you have some understanding of what constitutes an offer so that you do not inadvertently bind yourself or your school to an agreement if, for example, an ‘offer’ is publicised in your school newsletter.
To be enforceable, an offer must contain sufficient detail and terms to enable an agreement to be created upon the acceptance of that offer. Enforceable offers are distinguished from a mere willingness by one person to negotiate further details with the other party. The essential terms of the agreement must be clear before a legal offer is made and therefore before it can be accepted.
Does a contract have to be in writing?
The short answer is no. Save for a few exceptions, including to contracts relating to land and finance, contracts do not have to be in writing to be binding. Of course, terms of contracts are more easily understood and agreed upon when they are in writing.
It is recommended, therefore, that any agreement reached that is or was not initially made in writing, should be reduced to writing in some capacity where possible. This would mean keeping any documents relating to the contract and confirming details of any agreement reached. This way there is less scope for disputes about terms of the agreement.
Can I inadvertently make a verbal contract?
In theory, a contract out can be made from a verbal discussion. Provided the requisite elements have been met and the parties agree to the terms, a verbal agreement can be enforceable.
If you do make a verbal agreement, you should always keep file notes as well as other relevant documents to the agreement. It is also advisable to follow up any conversations with an email or letter confirming the details of the conversation. Again, the terms of the contract are generally clearer if these steps are taken.
Can a student have legal capacity?
Not all people are free to enter into a contract; generally speaking, this includes young people under the age of 18.
The exact capacity of young people to bind themselves to, and be bound by, a contract is limited and unclear in Victoria. As such it is always encouraged that where there is any agreement relating to an underage person, a parent or guardian should be entering into the contract on their behalf.
Accordingly, it is typically the parents who sign the enrolment contract and bind themselves to the enrolment terms of the school. Indeed, they are the ones who bear the financial burden for their child’s education. Therefore, enrolment contracts are valid and enforceable by virtue of the fact that the party entering to the contract (i.e. the parent/guardian) has legal capacity. That being said, whilst students are generally considered to lack legal capacity to enter into binding agreements, there is still scope to have them sign a Behavioral Code as part of the enrolment contract which can bind them to compliance with school rules and procedures.
How can Brennan Law Partners assist?
If you have any concerns about any current or prospective contracts, or if you are experiencing a contractual dispute, please contact us for tailored advice.
If you have any questions regarding any information in this BLP Brief, we welcome you to contact us at any time.
Part 2 of the Introduction to Contracts will discuss the enrolment contract in more detail.
This is meant as a guide only.Contracts Part 1