As a utilities and environmental business, you will encounter a wide range of contract types. As a result, you must understand the qualities of these contracts as well as what you can do to uphold your contractual obligations. This article will explain a general outline of contracts and some specific contract forms you will deal with as a utilities and environmental business.
Basic Components of any Contract
Definition of a Contract
Contracts are legally enforceable agreements. A contract contains legally binding terms, which you must carry out. If you do not do so, you may face legal consequences. For example, if you sign a contract that requires you to provide 600,000 Watts of electricity per month to a small house, you must do so by law. If you fail to deliver the electricity, the law will either compel you to do so or force you to compensate the other party to the contract.
The Basic Elements of a Valid Contract
To make your agreement a legally binding contract, there are three key elements you must include. These are:
- Offer and acceptance: For a valid contract to exist, one party must make an offer, and the other party must agree to it.
- Intention: Both parties must demonstrate an intention to enter the particular legal arrangement. You and your client do not necessarily need to express this intention verbally or in writing. Factors such as actions, payment, or general context can express this intention.
- Consideration: For an agreement to be a contract, both parties must have exchanged something of value. For example, one party providing payment to the other party in exchange for solar panels would constitute both sides giving consideration.
Types of Contracts in the Utilities and Environmental Industry
There are a few common types of contracts you will encounter in the utilities and environmental industry. We set these out in the table below.
| Contract Type | Explanation |
|---|---|
| Employment contracts | When hiring staff, it is essential to have well-drafted employment contracts. These detail the worker’s pay and hours, expected behaviours, working practices, and other such information. In a dispute between you and your employee, a well-drafted employment agreement can be referred to and used to settle disagreements. |
| Service contracts | Where you are providing a discrete service for a client, such as installing solar panels or replacing water pipes, you will need to draw up a contract dictating your terms of service. These agreements will outline what you are expected to do, the cost of your services, the conditions under which either party can terminate the contract and other related matters. It is very important to draft service contracts clearly to avoid needing clarification on what you are expected to do when the process begins. |
| Ongoing contracts | Where you provide a recurring service or product for a client, such as regular waste disposal or energy supply, you will need to execute a contract that outlines the terms of your service. These agreements will be similar to service contracts but will be drafted to fit the ongoing nature of your agreement. As such, they will include a cost structure that fits the variable amounts of the services or products you supply. |
Meeting Contractual Duties
Meeting your contractual obligations can be simple. However, failing to meet your contractual obligations can result in delays, unforeseen costs and other inconveniences. On top of seeking legal advice, some ways you can ensure you meet your contractual duties are by:
- Keeping copies of your contracts: Where you and an employee or client dispute the terms of your agreement, having a copy of your written contract at hand will allow you to refer back to what you agreed on and clarify any issues you might have. Not having a copy of the contract creates ambiguity and will impair your efforts to settle a dispute.
- Drafting as clearly as possible: For matters such as fees, conditions for termination or expectations, aim to draft as clearly and specifically as possible. Since you are legally required to perform the terms in the contract, you must be as clear as possible about what you are agreeing to.
- Not making promises you cannot keep: Because all contract terms are legally binding, you should not agree to anything that you are not sure you will be able to do. Otherwise, you may face legal action under relevant consumer law and risk having to compensate your client.
This guide provides key information on how to manage a business dispute as quickly and cost-effectively as possible.
Key Takeaways
As a utilities and environmental business, you will regularly deal with contracts. Understanding what makes up a contract and how to manage your contracts is essential to your continued success. Firstly, for an enforceable contract to exist, you need to have all the basic elements of contract formation. These are:
- offer and acceptance;
- intention; and
- consideration.
Furthermore, you will encounter various contract types, including employment contracts, contracts for service and ongoing contracts. To ensure you properly meet your contractual duties, ensure you draft terms clearly and relevantly to your capabilities, and that you keep copies of the contract after.
If you require assistance managing your contract for your utilities and environmental business, our experienced contract lawyers can help you as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today at 1300 544 755 or visit our membership page.
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