Contracts

When an offer or order is approved, a binding contract is established. The rule of thumb is that such contracts are bound by the negotiated terms. However, there are exceptions, e.g. when one of the parties is not legally competent to manage its financial affairs.

Contracts are binding unless...

  • When an offer or an order is approved a binding contract is established. The contract may be established even if the buyer and seller do not speak to one another, as is often the case when making a purchase at the grocery store.
  • However, no contract is established when a consumer does not respond to a sale offer within a given time limit. This may not be considered a consumer's silent approval.
  • Whether the consumer has read over the terms of the contract or not, he or she is bound by them. The seller must deliver the terms of the contract to the buyer before the contract is signed.
  • Some contracts are not binding. This includes:
  • contracts with children under the age of 18 or others who are not legally competent to manage their financial affairs, unless the contract is approved by a parent or guardian. However, contracts or purchases for an amount that doesn't exceed what an adolescent normally possesses would not be considered invalid.
  • contracts for anything illegal. These contracts may be punishable by law.

Verbal Contracts

  • Verbal contracts are generally as valid as written contracts. However, it can be difficult to prove what exactly has been agreed if there is no written contract.
  • In some cases there is a legal obligation to enter into a written contract, e.g., when purchasing real estate.

Standard contracts

  • Standard contracts, which are prepared by the buyer in advance, must be written in plain and intelligible language. If any uncertainty arises regarding the meaning of a standard contract, the contract will be interpreted in favour of the consumer.

Unfair contract terms

  • Instructions have been issued on unfair contract terms that apply to the European Economic Area. This text is only a set of instructions and is not an exhaustive list of all the items that could make the terms of a contract unfair.

Amendments and invalidation

In order to amend a contract, both parties must renegotiate. Under certain circumstances it is possible to invalidate contracts or set them aside, either in part or in whole, e.g., if:

  • the contract is obviously inequitable and unfair with regard to consumers, or causes a significant imbalance in the parties' rights and obligations under the contract, to the detriment of the consumers.
  • the consumer is bound to a contract that is unnaturally long, or it is made unreasonably difficult to terminate the contract for an indefinite period.
  • the terms of the contract are unfair in any other way.
  • if either party is made to enter the contract under duress or undue influence.
  • fraud has been committed, one of the parties enters into the contract under duress, or the mental incapacity or lack of knowledge of one of the parties is used to establish the contract.
  • it would be considered unfair or contrary to proper business practice to enforce the contract.

It is not possible to set a contract aside unilaterally (i.e., only on one party's behalf). Instead, this must be negotiated, or the parties must seek assistance from a complaints committee or the courts to have the contract rescinded.

Links of interest

Laws and regulations