When is a done deal not done?: a legally enforceable contract

It's very common in Australia, particularly in rural settings, for neighbours to "do a deal" on the shake of hands, and often without any written contract or agreement. But sometimes deals do come unstuck for a range of reasons – perhaps one party is no longer able to perform, or sees an opportunity for advantage, or simply had a different understanding of the deal.

So, under the law, when is an agreement legally binding and when is it not? The basic requirements for a legally enforceable contract are:

• Agreement must be reached in relation to all the essential elements of the bargain. A party cannot be held to a deal if a fundamental part of the deal has not been addressed or agreed.