How to read a contract before you sign it
Updated 13 Nov 2026 · General information, not legal advice
Most contract problems come from terms nobody read closely at the start. You do not need to be a lawyer to read a contract well, but you do need a method. Work through it with a pen, and do not sign anything you have been rushed into.
1. Check who the contract is with
Look for the full legal name of the other party, and its ABN or ACN if it is a business. A trading name alone is not enough: if something goes wrong you need to know exactly who to deal with. Check that your own name, and the property or goods involved, are described correctly.
2. Write down what each side actually promises
In one or two lines each, note what you will get, what you must do, and when. If you cannot summarise it simply, the contract may be vague, and vague promises are hard to enforce. Anything you were told verbally that matters to you should be in writing.
3. Follow the money
- The total price, and whether it includes GST, delivery, set-up or other fees.
- When payments are due, and what happens if a payment is late (interest, fees, the right to cancel).
- Price increases: can the other side raise the price during the contract, and with how much notice?
- Deposits: when they can be kept, and when they must be refunded.
4. Find the way out
Look for the length of the contract, automatic renewal, the notice you must give to end it, and any break or exit fees. A contract that is easy to enter and expensive to leave deserves a second look. Some contracts come with a cooling-off period set by law: for example, unsolicited consumer agreements (such as many door-to-door and telemarketing sales) usually carry a 10 business day period to cancel. Home purchases have cooling-off rules that differ between states and territories.
5. Read the risk clauses slowly
Terms headed limitation of liability, indemnity, warranties, default, security or guarantee decide who pays when things go wrong. Be especially careful with a personal guarantee: it can make you personally liable for a company's debts.
6. Know your baseline rights
Under the Australian Consumer Law, consumers get guarantees (for example, that goods are of acceptable quality) that a contract cannot take away. Unfair terms in standard form contracts with consumers and small businesses can also be challenged. Those protections have limits and exceptions, so check how they apply to your contract.
7. Check how disputes are handled
Look for a complaints or dispute resolution process, which state's law applies, and where any court action would happen. Note any time limits for raising a problem.
When to get advice before signing
Speak to a lawyer before you sign if a lot of money is involved, the contract is long-term (a lease, a franchise, a business purchase, a loan or a guarantee), you are giving a personal guarantee, or anything in it worries you. Paying for advice before signing usually costs far less than fixing a problem afterwards.
You can upload the contract to Legal Guide and ask it to walk you through these points, then take its summary and your questions to a lawyer.