Can a conversation via Zoom or text message constitute a contract in Australia?

For something to constitute a contract, does it always have to be in the form of a written contract? – No! it can be verbal or through email/text messages. So, how can you tell if you have entered into a contract with another party in a conversation either in person, on a phone call, on zoom or via email or text message? This would require assessing whether the essential elements giving rise to a contract in Australia are satisfied.

Offer

An offer could be made if you have been in a discussion with another party in relation to a product/service and both you and the other party have discussed the key terms required for your deal. Either party would not have to specifically use the term “offer” in their communication as such. It is sufficient if it is clear to the other party based on the discussion what the terms of the offer were. In such circumstances, an offer may have been made.

Acceptance  

There has to be an acceptance of the offer. This means that if you were having a discussion and during that discussion either you or the other party makes an offer, and the corresponding party accepts, then there is likely to have been acceptance. Acceptance could be communicated merely by saying for example “Yes, lets go ahead” or “It’s a deal” etc. Acceptance could alternatively be communicated by conduct, for example by going ahead and making a payment.

Intention to create legal relations

Intention is assessed objectively and not on the actual intention of either party. This element is often easily satisfied if the conversation is in a business context. In a domestic and social context, it is more difficult to prove this element. This means that you would be less likely to be in a contract with your grandmother when you offered to do her groceries, in return for chocolate cake. On the other hand, you would be more likely to be in a contract if you were offering to sell any goods/services of your business to another party.

Consideration

Consideration is basically just something you would give in exchange for the product/service. This usually involves money, but does not have to. Further, even nominal consideration is sufficient. That means that in your conversation, you could potentially satisfy this element by just saying for example “I will pay you $10 for it” or “I will give you my car in exchange” etc.

Certainty

The terms that you have discussed must have certainty. This requires that all the important terms essential to execute a contract have been agreed upon and the terms are clear and not vague. What this means, is that at the end of the conversation, each party needs to be clear on what they have agreed to and what their rights and obligations are. For example if you were to tell the other party, you would pay them “a sum of money” in exchange – the consideration offered would be too vague and uncertain to constitute a contract.

Capacity

Either party needs to have the capacity to enter into a contract. If a party is suffering from a mental disorder, is intoxicated or is a minor, they are unlikely to have the capacity to enter into a contract. This means that if you are aware of any of the above in relation to the other party at the time of your conversation, your conversation is less likely to constitute a contract.

Formalities

Not every contract needs to be in writing, but some do. The most prominent is that in relation to purchase of a property. These need to be in writing and a mere conversation with the seller/buyer of the property where you agree on the terms will not suffice. Others include an assignment of copyright and contracts falling under the consumer credit code that also need to be in writing.

LGM Advisors is a leading Melbourne law firm, professionals in Contract Law. LGM Advisors have the skills, experience and expertise to ensure that you and your contract matter is consulted upon with the utmost professionalism. Contact LGM Advisors and speak to a contract lawyer today on (03) 9832 0608 or by email at marketing@lgmadvisors.com.au.

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