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Good contracts are those where the parties have carefully taken into consideration of all the circumstances and issues that are likely to arise during the lifetime of the agreement and have adequately provided for them. Such contracts will have clearly and fully covered such matters as:

• Exactly what is required by each party
• Limits to what is required
• Payment terms, including credit terms and under what circumstances
• Risks - what could go wrong in the relationship and how to provide safeguards against this.

Terms of a contract

The terms of a contract are all the points of agreement between the parties concerning just how and under what circumstances the agreement is to be fulfilled.^[1] With some clear exceptions noted below, contract law does not specify what those terms must be as they are up to the parties to determine.

Contract law recognises two types of terms: express terms and implied terms.

Express terms are the terms of the contract which are specifically agreed to between the parties and are put in writing in the contract document or agreed to verbally between the parties.^[2]

Implied terms are terms that may not actually be put in writing, talked about or even considered, yet are still binding. These terms will actually be regarded as part of the legally binding agreement because the law requires them to be part of the contract, or because common sense, standard industry practice or past dealings help to support each party's reasonable expectation about how the agreement will be carried out and to what standard.

Common sense

In every agreement, there are matters that are so obvious that they go without saying. For example, common sense dictates that goods are appropriately packaged.

Standard commercial practice

Unless the agreement involves an entirely new product or concept, each industry will have well established customary practices, including recognised quality standards and terminology.

Past performance

Past dealings and arrangements often create an expectation that future agreements will be carried out in the same way, unless the parties decide to change the arrangement.

For further information read "Working with contracts" provided by Department of Innovation, Industry, Science and Research.

^{[1] Department of Innovation, Industry, Science and Research - "Working with Contracts"
[2] Ibid}