Key Takeaways

  • An express contract is a legally binding agreement where all terms are clearly stated—verbally or in writing—at the time of formation.
  • These contracts require mutual assent (offer and acceptance) and consideration (something of value exchanged) to be enforceable.
  • Express contracts are commonly used in business, employment, real estate, and service agreements because they reduce ambiguity and simplify enforcement.
  • They differ from implied contracts, which arise from conduct or circumstances rather than explicit terms.
  • Courts prioritize express contract terms over implied ones when both might apply to the same situation.
  • Including precise clauses, clear performance obligations, and dispute resolution terms strengthens the enforceability of express contracts.

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.

Common Uses of Express Contracts

Express contracts are widely used across industries because they bring clarity, predictability, and legal certainty to business relationships. Since all terms are explicitly stated, each party understands its obligations and the remedies available if terms are breached. Common examples include:

  • Business and Commercial Agreements: Sales contracts, distribution deals, and partnership agreements often use express terms to define payment schedules, delivery conditions, and liability.
  • Employment Contracts: These specify salary, duties, benefits, confidentiality obligations, and termination terms.
  • Service Agreements: Contractors, consultants, and freelancers use express contracts to outline the scope of work, deadlines, and compensation.
  • Real Estate Contracts: Purchase agreements, leases, and property management contracts clearly define property details, payment structures, and contingencies.
  • Licensing and Intellectual Property Agreements: Express terms detail the rights granted, usage restrictions, royalties, and enforcement mechanisms.

Because the terms are unambiguous, disputes are less likely and easier to resolve if they arise.

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.

Legal Effects and Enforcement of Express Contracts

One of the most important advantages of an express contract is the ease of legal enforcement. Courts favor express terms because they reflect the parties’ actual intentions at the time of agreement. When a dispute occurs, a judge or arbitrator can rely directly on the written or spoken language of the contract without needing to infer obligations from conduct.

Key enforcement considerations include:

  • Clarity of Terms: Courts examine whether the terms were sufficiently specific—such as price, quantity, delivery timeline, and performance obligations.
  • Evidence of Consent: Offer and acceptance must be clearly demonstrated. In written contracts, signatures usually satisfy this requirement; in oral contracts, witness testimony or conduct may serve as evidence.
  • Consideration: Each party must exchange something of value. If consideration is lacking, the agreement may not be enforceable.
  • Compliance with Formalities: Certain express contracts (like real estate sales or agreements lasting more than a year) must be in writing under the Statute of Frauds.
  • Breach Remedies: Express contracts often outline remedies, such as damages, specific performance, or termination rights, which courts can enforce according to the contract’s language.

Implied-In-Fact Contracts

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.

Implied-In-Law Contracts

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.

Drafting Tips for Strong Express Contracts

Drafting an express contract with precision significantly reduces the risk of disputes and strengthens its enforceability. Best practices include:

  1. Use Clear, Unambiguous Language: Avoid vague terms that could lead to multiple interpretations. Define key terms where necessary.
  2. Detail All Obligations: Specify deliverables, performance standards, payment terms, deadlines, and termination conditions.
  3. Include Dispute Resolution Provisions: Mediation, arbitration, or jurisdiction clauses provide a roadmap for resolving disagreements efficiently.
  4. Address Breach Consequences: Outline available remedies, such as liquidated damages or termination rights, to clarify expectations.
  5. Incorporate Governing Law: Identify which state’s or country’s laws will govern the agreement, especially in cross-border contracts.
  6. Update Regularly: Review and revise contracts periodically to reflect evolving business conditions, regulatory changes, or updated legal requirements.

Well-drafted express contracts provide transparency, minimize litigation risks, and ensure the parties’ expectations are legally protected.

Frequently Asked Questions

  1. Can an express contract be oral and still legally binding?
    Yes. As long as the essential elements of a contract—offer, acceptance, and consideration—are present, an oral express contract is enforceable. However, certain types (like real estate sales) must be in writing.
  2. What happens if an express contract conflicts with an implied contract?
    Courts generally give priority to the express contract because it clearly reflects the parties’ intentions and agreed terms.
  3. Do express contracts need to be notarized?
    Not usually. Most express contracts do not require notarization to be valid, though notarization can provide additional proof of authenticity.
  4. What makes an express contract unenforceable?
    A lack of mutual assent, insufficient consideration, illegality, or failure to comply with statutory requirements can render an express contract unenforceable.
  5. Are verbal agreements harder to enforce than written express contracts?
    Yes. While verbal express contracts can be valid, proving their terms and the parties’ intent is more challenging without written documentation.

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