Overview of the legal system

Australia is a common law jurisdiction.


Australian contract law, which is of fundamental importance for business and investment, is largely based on case law and not on any codified law or statute law.

In this sense, Australian contract law is similar to English law and that of other common law countries. Parties to a contract are given freedom to agree to whatever terms they choose. Australian law does not usually intervene or impose limits on the terms included in a contract, although there are some exceptions:

The Australian Consumer Law under the Competition and Consumer Act 2010 (Cth) (Competition and Consumer Act) provides certain non-excludable protections for consumers and small businesses including from unconscionable conduct (usually involving a significant imbalance of bargaining power), unfair contract terms in standard form contracts and a number of non-excludable statutory guarantees in relation to consumer transactions.

  • Provisions that impose penalties on a defaulting party (as opposed to a genuine pre-estimate of damages) may be unenforceable.
  • Arrangements that infringe the anti-trust provisions of the Competition and Consumer Act and unreasonable restraints of trade will not be enforceable.
  • Certain statutes govern particular types of relationship – for example, the Partnership Acts in each state and territory govern the relationship of partners among themselves and with third parties, while the Franchising Code of Conduct regulates the terms of franchise agreements.
  • Purported waivers of statutory rights or agreements not to sue or agreements to agree or negotiate or consult may not be enforceable.
  • The enforceability of an obligation or document may be affected by statutory, common law and equitable provisions and principles including: limits on the time within which to bring an action for breach of contract; suspension of certain rights (including a right of termination or enforcement) where a party triggers certain insolvency events including administration and receivership; protecting innocent parties who rely on representations of counterparties; and frustration of a contract by intervening events.

The enforcement of a security interest granted over assets or other collateral owned or in the possession of a counterparty may be subject to prior registration under the Personal Property and Securities Act 1999 (Cth).

It is recommended (but not necessary in most cases) that contracts be in writing.

Australia is a signatory to the Vienna Convention on Contracts for the International Sale of Goods. This convention provides uniform rules that govern the formation and performance of contracts for the international sale of goods. The parties to the contract may agree for the Convention rules not to apply and instead select local law as the applicable law.

Enforcement of legal rights

Legal rights and remedies, whether arising under contract or otherwise, are enforceable through the Australian court system. The Australian court system is similar to the English court system in terms of both procedure and implementation, except that Australia has a partially federal and partially state system.

Each Australian state and territory has its own system of courts, with the Supreme Court and Court of Appeal being the highest courts at state and territory level.

There is a separate system of federal courts. The High Court is the highest court of appeal from both federal and state courts.

Remedies available through the court system include damages, injunctions, and seizure of goods. Many Australian courts have the power to order parties to participate in mediation of their dispute before the court will continue to hear the matter.

In keeping with the Westminster system, the courts operate separately from the executive government.

Sophisticated regulatory framework

Australia’s transparent and efficient regulatory environment is world class. It is secure, certain and predictable, and is considered to demonstrate best practice among the OECD countries. Corporate governance practices in Australia are generally highly regarded.

Australia also has a sophisticated financial services sector.