skip to content
Law Handbook banner image


Making a contract involves an exchange of something of value to each party. Most often, one person pays money to another, and in return gains a benefit, such as goods or services. Whatever is given (or paid) is called consideration. The presence of consideration distinguishes a 'commercial' contract from an agreement between friends or family members which is not intended to be legally binding. A one-sided arrangement in which one person gets a benefit at the other's expense (such as in the giving of a gift) will not usually be a contract.

However, although the law demands that on each side the price must be of some real value, what is paid by one need not be comparable in value to what the other party is giving. So there can still be a contract, for example, where a person leases a house to a friend for a nominal rent. As long as there is an exchange of some kind the courts will usually enforce the contract.

Making a Contract  :  Last Revised: Tue Oct 9th 2018
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.