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How contracts get made

Sometimes it's obvious when a contract is made - like when you sign a lease or an employment contract. But it's not always so clear. We enter into contracts all the time without even thinking about it.

You're going to a football match: you walk through the turnstile and give the person behind the desk some cash. In return, they give you a ticket. Nobody has said a word to anyone else, let alone signed anything, but you've now entered into a legally binding contract with the football club; in exchange for your money, the football club has agreed to let you watch the game.

You probably won't have a problem with this - after all you paid to watch the match. But there are some situations where you can, unknowingly, get stuck with a contract that you don't really want.

If you make a contract over the phone or using the Internet, there are laws to protect you. You must be given clear and full information to help you make a decision about whether to buy and you usually get a 'cooling off' period. A cooling off period is a specified length of time when you can get out of the contract.

Common situations where you may make a contract without realising are:

  • Over the telephone - An agreement over the telephone can be a contract - it's as legally binding as a written contract.
  • Telephone booking service - Any booking made on an automated telephone booking service will usually be a contract.
  • Ordering something in a shop - Always check whether you will have to buy the item you have ordered, or if you will be free to change your mind.
  • The Internet - Ordering or booking over the Internet.

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But I haven't got anything in writing!

It's a common mistake to think you haven't got a contract because you haven't got anything in writing. In fact most contracts don't have to be in writing and many are not. The exceptions are agreements like leases, contracts to buy property and consumer credit agreements. Otherwise, as long as you have a clear agreement and the basic ingredients for a contract are there, you will have a contract whether it's in writing or not.

Having said that, it's always a good idea to get something in writing if you can - it helps to show what has been agreed if there is a dispute about it later on. If you haven't got anything in writing it often ends up being one person's word against another.

Updated March 2011

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