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Is a person bound once a contract is signed?

Generally, yes. This is true even if they did not read the contract, or were unsure what it meant.

To be safe, a person should never sign a contract unless they have read it, fully understand it, and want to be legally bound to do what it says.

If they are not sure, they should get legal advice before signing. Once a contract is signed, the other party can initiate court proceedings to seek performance of the contract, or damages if the contract is breached.

However, there can be exceptional cases where a person is not bound, even though they have signed.

Cooling-off periods

In some contracts, such as those to buy land, door-to-door sales contracts, and contracts to enter a retirement village, the law provides for a cooling-off period which allows a person to reconsider after signing a contract. During the cooling-off period they can legally opt out of the contract. This only applies to specific types of contracts, not to all.

If a cooling-off period applies, a person should receive a notice of their cooling-off rights at the time of signing. Often only a short time is allowed, sometimes only a few days. If a person wishes to exercise their rights to cool-off, they must give the other party written notice advising them as such, or must follow any other legal requirements that apply in relation to cooling-off for that particular type of contract.

Misleading conduct misrepresentation

If the other person, or someone on their behalf, gave a false impression about the nature of the document they were signing, or the terms in it, the parties may not be bound by the document. However, this can be hard to establish if the document itself clearly tells the person what the true situation was - see Misrepresentation.

Implied or explicit conduct

If it should have been obvious to the other party from a person’s conduct when they signed that they had no idea of the real nature of the document, for example, because they are unable to read, or it was written in a foreign language, they may not be bound. However, this defence is not available just because the person was not careful and did not read the contract. It must be shown that, for example, through the person's illiteracy or poor vision the document signed was radically different in practical effect from the document the person believed she or he was signing.

Even where grounds exist to rescind a contract, courts can be reluctant to set aside the transaction if it would affect people other than the parties themselves.

Agreement not to be bound

It is also possible for the parties to a contract to agree not to go ahead with it. Even after signing, if both sides agree that they do not want to go ahead as promised, they can agree to let each other out of the contract. If an agreement not to be bound is reached, it is prudent to have this recorded in writing.

Is a person bound once a contract is signed?  :  Last Revised: Fri Oct 12th 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.