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Understanding contracts
Contracts are part of everyday operations for many not-for-profits. It’s important to know what issues to look out for when signing on the dotted line.
Although your organisation may not have much power to negotiate when signing contracts, especially standard form contracts, there are some key principles to consider. If a contract is too risky, your organisation can always choose not to sign.
If your organisation is not incorporated, an individual will normally be required to sign a contract on behalf of the unincorporated group. This can mean that the individual is personally liable for rights and obligations under the contract. If this has become an issue, your group should consider incorporating. For more information go to our page on the Incorporation Decision.
For more detailed guidance on contracts, download our fact sheet on understanding contracts. This fact sheet includes information on:
- general principles of contract law
- reviewing a contract and approval processes for contracts, and
- specific types of contracts
Consumer Guarantees and not-for-profit organisations
Businesses, including not-for-profit organisations, must meet a set of basic standards when they supply products and services in Australia. These basic standards are known as ‘Consumer Guarantees’ and are included in the Australian Consumer Law (ACL).
Our fact sheet explains Consumer Guarantees and how they apply to not-for-profits.
Unfair contract terms
A community organisation may take the view that a term of a standard form contract is 'unfair'. If this can be demonstrated under the ACL, the organisation may seek for the term to be void (not valid or legally binding).
Our fact sheet outlines:
- who is covered by the Unfair Contract Term protections?
- what is an unfair contract term?
- what do you do if you think a term in your contract is unfair?
The content on this webpage was last updated in May 2023 and is not legal advice. See full disclaimer and copyright notice.
