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Slapping the label of ‘legal’ on any old document does not make it a legally valid material in 2025. For a document to be considered legal, such as a contract, it must meet particular criteria. As detailed below, both traditional principles and modern digital practices in Australia demand that a signed document meets a set standard to be enforceable.
What Is A Contract?
A contract is a legally binding document between two or more parties that sets out the promises each party intends to fulfil in exchange for something of value. In today’s digital era, contracts can be executed with both traditional ink signatures and modern electronic signatures. To understand more about the evolving nature of legal agreements, take a look at our guide on digital contract essentials. A standard contract will usually contain the following elements:
- Offer and acceptance – A contract must contain a clear offer and an unequivocal acceptance of that offer by all parties involved.
- Intention – All parties must intend to create legal relations. Misleading or deceiving someone into signing does not result in a legitimate agreement.
- Consideration – There must be an exchange of benefits – whether goods, services, or a promise – that substantiates the contract.
- Capacity –Each party must have the mental capacity to understand the terms of the agreement. For example, minors (under 18) or individuals with certain cognitive impairments are generally not allowed to enter into binding contracts without appropriate legal safeguards.
| Example When putting together an Employment Contract, an employer must ensure that all these factors are met to create a legally valid document. For instance, the following elements will need to be present: – Offer of employment – Employee’s capacity to accept the offer and enter into the agreement – Salary (consideration) For further insights, you might also review our article on How Important Is An Employment Contract? |
Ways You Can ‘Accept’ A Contract
Most formal agreements are accepted by a signature. The traditional approach is to put ink to paper and seal the deal. However, in 2025 many digital systems are available and contracts are no exception. Electronic signatures are not only legally recognised but also widely adopted by businesses to expedite agreements and reduce administrative overhead.
At Sprintlaw, we offer an E-Signature tool where clients can sign and send legal documents electronically. You can manage your signatures through our custom-built platform designed to integrate seamlessly with your workflow. For additional ideas on digital legal solutions, check out our Legal Health Check for Businesses.
You can access this service as part of your Sprintlaw Membership, which provides a range of resources and expert advice to ensure your legal documents remain compliant with current Australian law.
| Example Dave is a florist, and Dan texts him enquiring about a bespoke floral arrangement. Dave replies affirmatively, and Dan follows up with, “Great, I’ll take the floral arrangement and be there to pick it up at 7:30am for $150 on Wednesday.” By agreeing to these terms, both parties have effectively accepted a contract, albeit informally. This agreement is still considered valid and enforceable under Australian law. For more on ensuring your contracts are robust, see our post on What Is A Contract?. |
What About Verbal Agreements?
Verbal agreements are also legally binding. Entering into a contract verbally remains valid in 2025, provided it meets the key requirements—intention, capacity, offer/acceptance, and consideration. However, given the challenges in proving the specific terms of a verbal agreement, it is always advisable to document your arrangements in writing.
Even if you rely on a verbal promise, following up with a confirmation email or written summary can provide much-needed evidence should any disputes arise. This approach aligns with our expert legal tips for maintaining comprehensive records.
When Is A Contract Void Or Unenforceable?
A contract can become void or unenforceable for several reasons. This may occur if the contract’s subject matter is illegal or if its formation fails to comply with the legal standards mandated by current Australian law.
The following circumstances may render a contract unenforceable:
- When the contract is based on an illegal activity or includes clauses that do not comply with the law.
- If one or more parties lacked the capacity to sign the contract—for example, minors or individuals with certain cognitive impairments.
- If the contract was signed under duress, meaning a party was coerced or forced into entering the agreement.
| Example Suppose Ali, who has a recognised cognitive impairment, is pressured by a relative into signing a contract transferring all of their assets. Ali, being both underage and lacking the full capacity to understand the terms, is coerced into signing the agreement without receiving any genuine benefit. In such circumstances, the contract would not be enforceable. This example highlights why ensuring that all parties possess the necessary capacity and are free from undue pressure is crucial—a principle that remains true in 2025. |
It’s important to note that the enforceability of a contract is determined on a case-by-case basis, considering all the circumstances surrounding its formation. For further clarity on modern contractual obligations, refer to our article on what regulations affect your corporation.
Can A Legal Document Be Terminated?
Yes, once a legal document is signed, the contractual obligations are not necessarily permanent. Most contracts include termination clauses that specify how and when the agreement can be ended. Alternatively, a contract can also be concluded with a formal Deed Of Termination.
For instance, many employment contracts include a notice period—often around four weeks—to ensure a smooth transition when an employee resigns, in line with modern employment standards. If you need to review your termination rights, our resource on Employment Contract provides useful insights.
Contracts may also be terminated if one party breaches the agreement or through the doctrine of frustration, where an unforeseen event renders performance impossible. Such scenarios are typically managed via force majeure clauses, which protect both parties under extraordinary circumstances.
In 2025, the legal landscape continues to embrace technological advancements, making secure and efficient contract management a reality. Whether you are a small business or a large corporation, utilising digital platforms for creating, storing, and enforcing contracts not only streamlines your operations but also ensures compliance with current legal standards. To learn more about integrating technology with your legal processes, check out our guide on Legal Health Check for Businesses.
Key Takeaways
When drafting or signing a contract, four key elements are essential: a clear offer and acceptance, mutual intention to be legally bound, valid consideration, and appropriate capacity among all parties involved. These components ensure that agreements are enforceable under Australian law in 2025.
Digital innovations such as e-signatures and secure online platforms have made managing legal documents easier, without compromising their enforceability. Staying informed and seeking legal assistance when necessary helps protect your interests in a rapidly evolving legal environment.
It is always wise to get expert legal assistance when drafting or reviewing your agreements. Keeping up to date with current legal requirements and embracing technology-driven solutions can safeguard your business and ensure your contracts fully protect your interests.
If you would like a consultation on your options going forward, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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