The topics in the Dial-A-Law series provide only general information on legal issues within the province of Alberta. The purpose is to make you aware of your legal rights and responsibilities. This is not legal advice. If you require legal advice, you should contact a lawyer through our lawyer referral service line.
This topic discusses things to consider when signing a contract for the sale and purchase of goods or services.
A contract is legally binding when there is an 1) offer, 2) acceptance and 3) consideration. For example, you offer to sell your car for a certain price and someone accepts your offer. Consideration is the value or price exchanged between you. It does not matter what the value is. The value could be as little as $1. The Courts will not generally question the value as long as something of value is exchanged. The contract is legally binding once there is offer, acceptance and consideration.
If you offer to give your car to someone for no value in exchange, then this is considered a gift. There is no legally binding contract because there is no value exchanged. You can change your mind about the gift at any time before the other person actually receives it. You cannot change your mind about a contract. Once a contract is signed by both parties, it cannot be cancelled if one party changes his mind. Both parties must agree to have the contract cancelled. If one party refuses to perform or honour the terms of the agreement, the other party can go to the Court and ask the Court to enforce the contract or grant damages.
A contract may be oral or written. An oral contract may be legally binding if you can prove that it was agreed upon and paid. However, certain contracts, such as contracts for the purchase and sale of land, must be put in writing in order to be valid. Although oral contracts can be binding provided they meet the requirements of forming a contract, remember that proving the existence or terms of an oral contract is much more difficult than with a written one.
Written contracts provide more certainty about the terms you both agreed upon. Read all the terms written on both the front and back part of the contract before you agree to them. Be sure you understand all of the terms before you sign it. If you do not understand, ask to have it explained. Where a standard form contract is used for a purchase and sale, ask the seller to change the terms where you do not agree. If the seller refuses, you either agree to the seller’s terms, or take your business elsewhere.
As a general rule, if you are over the age of 18 and sign a written contract, you are legally bound by that agreement, whether you read it or not. Unless you can prove in Court that the seller deceived you, lied about the contents of the contract, or did not bring an essential term or an onerous disclaimer clause to your attention, the Courts will assume that you read and agreed to all of its conditions.
The goods that are being sold and purchased, including the quality of the goods, should be clearly described in the contract. Use a serial number if there is one. State the quality of goods to be supplied, and make sure the quality of the goods delivered is the same as what is promised in the contract. If the product is new, make sure the contract states “new” and new goods are delivered.
There is an implied promise that the goods are of good quality unless you sign a contract that says the quality is expressly as stated in the contract. For example, the quality of the goods may be described “as is”, and if you sign the contract, the quality of the goods is as expressly stated, and you will have no warranty of quality.
A contract should also include delivery dates, completion dates of work being done, and details of financing. Never sign a contract with blank spaces to be filled in later. Fill in the blank spaces or cross them out. All changes made to the contract must be initialled by both parties to prove that consent was given to these changes.
Any promises made to each other regarding the agreement must be written down and added to the contract. Both parties must agree and sign to have the additions made to the contract. If there is no agreement or proper execution, you cannot hold the other party to that promise later on, as there is no evidence of the promise. For example, if you buy a refrigerator and the salesperson tells you that there is a 10-year warranty, ask the salesperson to put it in writing. If you do not, and the fridge breaks down, a Court will generally follow the written contract instead of the oral promises. If the salesperson refuses to add promises into the contract, this should tell you whether the seller intends to honour such promises.
Dial‑A‑Law is a Calgary Legal Guidance public service project funded in part by the Alberta Law Foundation.