Contract Formation in Australia

Introduction

The rules of contract formation in Australia determine when legally binding obligations arise between parties. The common law requires offer, acceptance, consideration, and intention to create legal relations.

Offer and Acceptance

An offer is a definite expression of willingness to contract on specified terms. Acceptance must be communicated to the offeror. The postal acceptance rule provides that acceptance by mail is effective upon posting.

Consideration

Consideration is the price paid for a promise and is essential for enforceability. The consideration need not be adequate but must be sufficient.

Intention to Create Legal Relations

Parties must intend their agreement to be legally binding. Social and domestic agreements are presumed not to be intended as legally binding, while commercial agreements carry the opposite presumption.

Conclusion

The formation requirements ensure that only serious, deliberate agreements are enforced, providing certainty for contracting parties.