Most people are familiar with a contract as a signed agreement between two parties. However, this isn’t always the case. This article will provide advice regarding suing someone without a signed contract in general. However, the case study of a building contractor will be used. A building contractor is typically someone who has offered to enter into, an agreement for services. This can include the contracted party performing building work or an arrangement for work to be carried out.
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What is necessary to form a contract?
A contract does not have to be written, they can also be verbally formed. A contract has three fundamental elements necessary for creation.
- An offer. This is generally monetary in nature and occurs when an offer is made. You may also offer to give something or do something in return.
- Acceptance. This is done when the seller agrees to supply the goods or services. The acceptance may be in words or an action (e.g. signing a written agreement or verbally agreeing to particular terms)
- Consideration. This is the value (typically money) that is given in return for the goods or services offered. It can also be a promise to pay at a later date after certain events occur.
In addition to these elements the contract must have a lawful purpose and clear terms. Subsequently, if you have an oral agreement with the above elements with a contractor you may be able to pursue legal action. A notable exception to this is regarding property. Contracts for the sale of property must be in writing and signed by the seller.
When can you pursue legal action?
Breach of contract
When a party to a contract breach terms the breached party may be entitled to pursue an action for an amount to cover reasonable costs.
Unfair contract terms
Under Australian Consumer Law there are national unfair contract terms which protect consumers from unfair contracts. For more clarity on what constitutes an unfair term, Fair trading NSW has a list.
Loss or damage to property
This is particularly relevant for building contractors. When a party causes loss or damage to someone’s property the affected party may seek compensation to offset this loss.
Misleading or deceptive conduct
The ACL protects consumers from misleading or deceptive conduct. Business conduct is likely to breach the law if it creates a misleading overall impression among the intended audience. This can be related to the price, value or quality of consumer goods or services. The business conduct can includes actions, statements, advertisements or any representation made by someone.
Conclusion
Ultimately it is possible to pursue legal action against someone without a signed contract. However, it’s necessary to have the elements of a contract for an oral contract to be legally binding. It can also be challenging to identify the terms agreed upon for an oral contract. Subsequently, you should always engage a lawyer and create a written contract to ensure clarity of the contracts terms.
