In an ideal world, every deal your business makes is neatly captured in a written contract, signed by both parties, before anyone starts work, ships products, or makes a payment.
In the real world, things move fast. A customer says “go ahead” over email, your supplier starts manufacturing, your contractor turns up on site, or you begin delivering services while the paperwork is “still being finalised”.
This is where acceptance by conduct becomes important. In Australian contract law, a party can sometimes accept an offer not by signing a document, but by acting in a way that clearly indicates agreement.
For small businesses, acceptance by conduct can be both helpful and risky. It can help you enforce a deal that was never formally signed. But it can also lock you into obligations you didn’t mean to accept.
Below, we’ll walk through what acceptance by conduct means, how it can create a binding contract, common business examples, and practical steps you can take to reduce misunderstandings (and disputes) when contracts aren’t signed.
What Is Acceptance By Conduct (And Why Does It Matter For Your Business)?
Put simply, acceptance by conduct is when someone accepts a contractual offer through their behaviour, rather than through a spoken or written “I accept” or a signature.
In many business situations, conduct can be just as powerful as a signature. If one party makes an offer, and the other party does something that objectively shows they agree to that offer, a contract may be formed.
How Acceptance Usually Works
Most contracts are formed through:
- Offer: one party proposes terms (for example, “We’ll provide X service for $Y under these conditions”).
- Acceptance: the other party agrees to those terms.
- Consideration: something of value is exchanged (usually payment for goods/services).
- Intention: both parties intended for the arrangement to be legally binding (usually assumed in commercial settings).
If you want a quick refresher on the basics, the concepts of offer and acceptance are at the heart of Australian contract formation, including in everyday commercial arrangements.
Why This Matters In Practice
Acceptance by conduct matters because it can determine:
- whether you can enforce payment when the other side won’t sign;
- whether the other side can enforce delivery timelines or quality requirements against you;
- which “version” of terms applies if multiple documents were floating around (quote, purchase order, email chain, draft agreement); and
- whether your business accidentally accepted someone else’s terms (including terms you would never have agreed to if you’d slowed down and reviewed them).
In other words, acceptance by conduct can be the difference between “we were still negotiating” and “we had a deal”.
A signature is strong evidence that a person agreed to a contract, but it is not the only way a contract can become binding in Australia.
In many circumstances, a contract can be formed without a signed document, including where there is:
- a verbal agreement;
- an agreement formed by emails or messages; or
- acceptance by conduct (for example, starting the work or paying the invoice).
This often surprises business owners, especially when a dispute comes up and one party says, “But we never signed anything.” That statement might be true, but it doesn’t automatically mean there was no contract.
If you’re weighing up whether something is enforceable, it can help to understand what makes a contract legally binding in an Australian business context.
What Courts Look For: Objective Intention
When there isn’t a signature, the focus often shifts to what a reasonable person would conclude from the parties’ words and actions.
Courts generally look at the objective evidence, such as:
- the quote, proposal, or scope of works that was sent;
- whether there was a “yes” (even informally) in an email or message;
- whether a purchase order was issued;
- whether goods were delivered or services were performed;
- whether invoices were paid (even partly);
- whether someone objected to the terms (and if so, when); and
- whether the parties behaved like they were in an ongoing contractual relationship.
“Subject To Contract” And Similar Phrases
One important exception: sometimes parties make it clear they don’t intend to be legally bound until a formal contract is signed.
For example, if your emails clearly state “subject to contract” (or “pending final contract execution”), that can help show the deal was not final yet - but it isn’t always determinative on its own.
However, you need to be careful: if your business then proceeds as though the deal is final (for example, you commence delivery at the agreed price), your conduct can blur that line.
Common Examples Of Acceptance By Conduct For Small Businesses
Acceptance by conduct comes up across almost every industry. Here are practical examples where Australian businesses most commonly run into issues.
1. Starting Work Before The Contract Is Signed
You send a client a proposal and a draft agreement. They don’t sign, but they give you access to their systems, schedule onboarding, and ask you to start immediately. You begin providing services and invoice them.
Even without a signature, that conduct may indicate acceptance of the offer (or acceptance of a narrower set of agreed terms, depending on the facts).
2. Paying An Invoice (Or Part-Paying)
A customer receives an invoice that refers to your terms and conditions. They pay it without objecting to those terms.
Payment can be conduct pointing to acceptance, particularly where the invoice and surrounding communications clearly tie payment to supply on those terms (though it won’t always be conclusive in every situation).
3. Accepting Delivery Or Using Goods
If a buyer accepts delivery of goods and uses them, that may amount to conduct consistent with a contract being on foot (even if paperwork is incomplete).
This can matter in disputes about who bears risk, who is responsible for defects, and when ownership passes.
4. Renewals And Rolling Arrangements
Many service arrangements renew each month or each year. Sometimes the written contract expires, but both sides keep performing as before: services continue, invoices are issued, invoices are paid.
In that situation, the parties might be treated as continuing the relationship on the same terms (or on new implied terms), depending on how things played out.
5. Clicking “Accept” Online
Online agreements are a classic example of acceptance by conduct. Clicking an “I agree” button, continuing to use a platform after being presented with updated terms, or creating an account can all be conduct that indicates acceptance.
For online businesses, having clear, well-placed terms matters because customers may never “sign” anything in the traditional sense. This is often managed through properly drafted Website Terms and Conditions.
The Risks: How Acceptance By Conduct Can Create Disputes (And Unexpected Obligations)
Acceptance by conduct isn’t just a technical legal concept. It’s a common source of commercial disputes, especially when the parties had different assumptions about what was agreed.
Risk 1: You “Accepted” The Wrong Terms
A common problem is when both sides exchange different documents:
- you send your proposal and your standard terms;
- the other side responds with their purchase order and their supplier terms; and
- everyone starts performing without clarifying which terms apply.
If a dispute happens later, the fight is often about whose terms govern the deal (and whether conduct amounts to acceptance of one set of terms over the other).
Risk 2: You Start Work While Key Terms Are Still Unclear
Sometimes the parties agree on “the big stuff” (price and deliverables) but not the risk areas, such as:
- who owns intellectual property created during the project;
- liability caps and exclusions;
- payment timing and late fees;
- timeframes and delay consequences; and
- termination rights.
If you begin work without locking these down, you can end up arguing later about what terms should be implied, or what was “reasonable”. That’s not where you want to be.
From a commercial perspective, once you’ve delivered the goods or performed the service, it’s harder to negotiate protective terms. The other side may think: “We’re already underway, why do we need to sign this now?”
This is why it’s usually safer to have a signed contract (or at least a clearly accepted scope and terms) before you start.
Risk 4: Internal Confusion In Your Own Business
Acceptance by conduct isn’t only about what your customer does - it’s also about what your staff do.
If a team member starts delivering services, confirms booking dates, or accepts a purchase order without escalating it, that conduct can create obligations for your business.
This is where internal processes and templates can make a big difference (for example, only certain people can approve variations, only certain people can accept purchase orders, and so on).
Practical Steps To Protect Your Business When Contracts Aren’t Signed
You can’t always avoid unsigned deals - and in some industries, it’s simply how business gets done. But you can reduce your risk significantly by tightening your processes and documents.
1. Make Your “Offer” Clear And Self-Contained
If you’re sending a quote or proposal, make sure it clearly states:
- exactly what you’re supplying (and what’s out of scope);
- price, payment terms, and GST treatment;
- timing and delivery milestones (if relevant);
- how the customer accepts (signature, email confirmation, deposit payment); and
- that your standard terms apply (and where they can be found).
Many businesses manage this using a tailored set of Terms of Trade, referenced consistently in quotes, invoices, and onboarding emails.
2. Specify What Counts As Acceptance
If you want certainty, spell it out. For example:
- “You accept this quote by signing and returning it, or by instructing us to commence work, or by paying the deposit.”
This doesn’t eliminate every dispute, but it can make it much easier to show that acceptance by conduct occurred.
3. Use “Subject To Contract” Carefully (And Consistently)
If you truly don’t want to be bound until a formal agreement is signed, you need to ensure your communications and behaviour align with that.
That might include:
- clearly stating the deal is “subject to contract” in key emails;
- avoiding starting work (or limiting work to a small paid discovery phase with its own terms); and
- not ordering materials or making commitments you can’t unwind.
4. Control Variations And Scope Creep
Disputes often arise not at the start, but when the scope changes mid-stream.
Consider having a simple process for variations, such as:
- a written variation request (even by email);
- an updated quote; and
- clear approval before additional work starts.
Where you do need to change an agreement, documenting it properly can help avoid “we never agreed to that” arguments later. Depending on the situation, this might be handled through a Deed of Variation.
5. Don’t Rely On A “Handshake Deal” For High-Risk Work
Some deals are too risky to rely on conduct alone - especially where there is:
- a large contract value;
- long delivery timeframes;
- custom work or IP creation;
- complex termination rights; or
- meaningful liability exposure.
In those cases, it’s usually worth investing in a proper contract upfront, or at least a formal set of terms that are clearly accepted before you start. If you’re unsure what level of documentation you need, getting support with contract drafting can save you major headaches later.
6. Keep Your Evidence (And Keep It Organised)
If acceptance by conduct becomes relevant, evidence matters. Encourage your team to keep a clear record of:
- the version of the quote/proposal sent;
- emails and messages where instructions were given;
- purchase orders and invoices;
- delivery dockets, timesheets, and project milestones; and
- any objections raised (or not raised) by the other party.
These details often make the difference between a straightforward debt recovery and a drawn-out dispute about what was agreed.
Key Takeaways
- Acceptance by conduct can occur when a party behaves in a way that clearly indicates they agree to an offer, even if they never sign a contract.
- A contract in Australia can be formed without a signature through conduct, emails, or verbal acceptance - what matters is the objective evidence of agreement.
- Common business examples include starting work, paying invoices, accepting delivery, continuing a relationship after expiry, and clicking “accept” online.
- The biggest risk is accidentally locking your business into the wrong terms, or proceeding while key terms (like liability, IP, and termination) are still unclear.
- You can reduce risk by clearly defining what counts as acceptance, using consistent terms, controlling variations, and keeping strong records.
Note: This article is general information only and not legal advice. Every situation is different, and whether conduct amounts to acceptance (and on what terms) depends on the specific facts.
If you’d like help setting up contracts and terms that reduce the risks of acceptance by conduct (especially when you need to move fast), reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
