Express Contract: Everything You Need to Know
An express contract is an agreement with clearly stated terms to which both parties are bound at the time it is formed. This contract may be either oral or written.3 min read
An express contract is an agreement with clearly stated terms to which both parties are bound at the time it is formed. This contract may be either oral or written. It must demonstrate an offer and unconditional acceptance, and be expressed in an easy-to-understand manner.
Express contracts are different from implied contracts because the terms are defined explicitly and exactly, and they are based on these terms rather than the behaviors, actions, and apparent intentions of the parties.
The terms of an express contract are specific, such as the exact quantity of products to be delivered or the exact services to be performed. They may include the particular time when the transaction will take place, so there is no ambiguity or vagueness about what is to be expected.
If an express contract exists, there may not be another implied contract that covers the same situation, because the law does not allow any substitutes for the express contract terms.
When is an Express Contract Valid?
There are two circumstances that must exist to enforce the validity of an express contract:
- The acceptance of the contract must be absolute; it must be done exactly as the contract offer provides. Any attempt to amend or alter the agreement is a counter-offer, not acceptance of an express contract.
- The parties must be exchanging an item or service of value or otherwise suffer a loss. Therefore, they are bound to fulfill the contract terms to earn the reward or receive compensation for their losses.
Express vs. Implied Contracts
There are two categories of contracts: express and implied contracts. For a contract to be considered an express contract, there must be clear and unequivocal terms to communicate a promise that the parties have made to one another.
An implied contract is based on the parties' behaviors, which lead them to assume the existence of a contract. They come into existence based on the parties' circumstances and are not written. They do however involve one party benefiting from their actions toward another or the understanding that an agreement exists between the parties.
Implied contracts can also be classified as implied in fact or implied in law.
Implied-in-fact contracts exist when an individual expects to receive a product or service when they arrive at a business that provides it. For example, if a patron goes into a restaurant, the restaurant owner would expect that person to place an order and pay for it. The patron expects to receive the food they ordered. This understanding between the two parties is an implied-in-fact contract.
Implied-in-fact contracts are assumed, based on the circumstances and actions of the two parties. They are not written or even put into specific words. However, legally the contract does still exist because it's clear what the parties' intention is and what consideration is offered in exchange.
Implied-in-fact contracts are equally valid and enforceable as express contracts. The only difference between them is that implied-in-fact contracts are not written, and enforcing them depends on a court assuming the intentions of both parties based on their previous business activities and typical transactions.
Technically, implied-in-law contracts are not truly contracts. A court may decide that a contract did exist due to the parties' behavior, which implied that an agreement existed between them. A court might get involved when one party demands restitution from the other for services or products that were given in exchange for consideration.
These are also known as quasi-contracts. Although at least one essential contract element is missing, the courts may still enforce them as binding agreements. They prevent injustice from taking place when one party is enriched in some way at the expense of the other party.
A court will decide that an implied-in-law contract existed when the following conditions are met:
- One party has benefited in some respect at the other party's expense.
- There was injustice in the way the enrichment took place.
- The plaintiff, or the party who suffered the loss, has not behaved wrongly.
- Based on the parties' relationship and the circumstances, it is reasonable to decide that a contract existed.
A contract of this type does not have the element of mutual assent. However, the court may still decide that a lawful contract exists between the parties, and require that it be fulfilled.
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