Contracts: The basis of Business

Contracts: The basis of Business

  • 12 Aug 2020

In this issue, we wish to introduce and outline an area of law of fundamental importance to all persons involved in business. This is the lease of commercial premises. With the substantial increase in the number of Indians now living in Australia and our increasing contribution to the commercial, professional and academic spheres of this community, we are all affected by and therefore should be aware of the principles of contract law because a commercial lease is essentially a contract between the owner of premises whereby the tenant is given a right to occupy and use the premises in exchange for payment or rent. Only as far back as 1979-1980 there were only a handful of Indian restaurants operating in Melbourne’s Inner city and metropolitan areas.

Recent estimates indicate that as many as one hundred and fifty (150) Indian restaurants and Take Away Food Shops now operate in the same area.

In future issues we will outline and analyse the legal framework affecting other transactions that our readers will commonly enter into.


Human nature being competitive, it has long been recognised that individuals will only produce and perform at their best when they are free and at liberty to negotiate and bargain. The attraction and validity of this system has perhaps been one of the major reasons for the recent spectacular demise of the socialist East block system.

At the core of the private enterprise system is the notion that people are free to decide whether or not to enter into contracts and if so upon what terms. As important as this freedom of contract, is the resulting need to ensure that, having concluded a bargain, the parties to it have the confidence that it will be observed and performed or, should one party fail to so perform, that party would become liable to the other party of an award of damages aimed at compensating the innocent party for the breach of contract. Through the courts, the law provides this function of enforcing contracts or compensating where breach occurs. In our commercial dealings, the practical consequences of these principles is that we are at liberty to form the terms of our agreement including the price to be paid or the terms under which work or services is to be provided. However, along with this freedom is attached an obligation and commitment in that once we conclude a bargain that has the fundamental ingredients of a contract, then we are required to perform the obligations arising under that contract. Should we fail to so perform, we expose ourselves to legal action and a liability to pay damages.

In addition to these general principles, in recent times our society through the Courts and Parliaments has seen fit to regulate and restrict our freedom to contract. Today there exists an ever growing body of law composed especially of legislation, that overrides and in some cases strikes down the contracts we have freely entered into. As a result, one cannot be confident in the absence of legal advice, that the rights and obligations of the contracting parties are to be found exclusively within the express terms of a contract. Depending on the subject matter of the contract, legislation and court rules may exist which have the effect of varying or striking down the terms of the contract.

Posted in: Litigation & Dispute Resolution,

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