Key Takeaways

  • Express terms are the clearly stated provisions in a contract, agreed upon by both parties, either in writing or verbally.
  • These terms take precedence over implied terms and are critical in defining each party’s rights and obligations.
  • Express terms can cover price, deadlines, performance standards, dispute resolution, and other essential clauses.
  • A breach of an express term can lead to serious legal consequences, including termination of the contract or claims for damages.
  • In express terms contract law, terms can be classified as conditions (essential) or warranties (less critical), affecting remedies available in case of breach.

Express terms contract law applies when two parties make direct statements about their obligations to one another. It is an important part of contract law, although it can have complex interplay with certain types of implied contracts.

What is a Contract Term?

Contract terms include all provisions that are part of a contract. Each contract term constitutes an obligation between the two contracted parties. Breach of a contract term may lead to litigation. All terms of a contract may not be expressly stated. Some terms hold less legal weight because they are not central to the purpose of the contract. ;

Types of Express Terms

In express terms contract law, express terms can take several forms, each serving a specific role in shaping the agreement:

  • Written terms – Found in formal contracts, purchase orders, service agreements, and other documented forms.
  • Oral terms – Agreed upon verbally but still legally binding if evidence supports them.
  • Standard form terms – Pre-drafted, non-negotiable terms often used in consumer or business agreements.
  • Custom or trade terms – Industry-specific language or obligations recognized in a particular sector.

While express terms are generally clear, disputes can still arise over interpretation, particularly if terms are ambiguous or incomplete. Courts will often consider the plain meaning of the words, the context of the agreement, and any relevant industry practices.

Express And Implied Contracts

An express contract is a term that is directly acknowledged and stated by both parties. They consist of the direct promises made by either party to the other, and they are binding. Express contracts can be written or verbal. Either way, they must be understandable by both parties. They should include valuable consideration for both parties, meaning something of value should be distributed to each party. Unconditional acceptance of an offer is necessary for a contract to become legally binding.

In general, the contract must reflect both parties' interests and intentions in order for it to be binding. If an express contract is made regarding a subject, it will generally be upheld over any implied contracts that are present in the legal code. Implied contracts can also arise from the situation and facts of any business interaction. These do not need to be stated in writing. Contracts can also be created through certain actions, and the law does not treat these any differently than a written, signed contract. For implied contracts of fact, a court would assess the business' intentions based on their dealings with the other party.

Contracts implied in fact are treated much like express contracts. There are a few differences in how courts treat contracts implied by law. This type of contract is referred to as a quasi-contract. They apply when the parties did not have any elements of an express contract between them and a legal dispute arises. These standards are meant to keep one party from unfairly benefiting from another party's mistake.

As an example, imagine that a set of parents ask a third party to hold $10,000 in trust for their child. But instead of doing so, the third party tries to keep the money. The law protects the parents in this case. It does not allow the third party to keep the money just because there was no formal contract in place. These parties have an implied contract by law, and the third party must fulfill the obligation to distribute the money to the child.

Courts are careful about applying these laws. They do not wish to overstep their bounds and impose contracts that were not agreed upon by either party. However, contracts implied by law are usually imposed when one of the following is true:

  • The plaintiff has lost a significant amount of money to the defendant
  • The court believes the defendant was enriched unjustly by the transaction
  • The plaintiff has not taken any action that would nullify a contract

The court will consider any special circumstances to decide whether it is reasonable for them to intervene between the two parties.

How Express Terms Are Incorporated

Express terms can be incorporated into a contract through:

  1. Direct negotiation – Parties agree on specific clauses during contract discussions.
  2. Reference to external documents – Terms from another document, such as a company policy or technical specification, can be expressly incorporated by reference.
  3. Pre-contractual statements – Certain representations or promises made before signing can become express terms if clearly intended to be binding.
  4. Written confirmation – Following verbal agreements, written confirmation (such as an email or signed memo) can serve as evidence of express terms.

Incorporation must occur before or at the time the contract is formed; attempts to introduce new terms later generally require mutual agreement.

Importance And Impact Of Broken Terms

To understand the relative importance of a term, one must examine the purpose of the contract. When the contract has been put in writing, most important terms should already be listed in the contract. Each party is obligated to abide by the contract once they have signed it. This is true whether or not they have read and understood the contract.

Remedies for Breach of Express Terms

When a party breaches an express term, available remedies depend on the nature of the term and the resulting harm:

  • Termination of contract – Possible when a condition is breached.
  • Damages – Monetary compensation for losses caused by the breach.
  • Specific performance – A court order requiring the breaching party to fulfill their contractual obligation.
  • Injunction – A legal order preventing a party from taking certain actions in violation of the contract.

In commercial contexts, parties may also include liquidated damages clauses that predefine the amount payable upon breach, provided they are a genuine pre-estimate of loss and not punitive.

Terms May Be Conditions or Warranties

Contracts include many types of terms. Some are important, and some are not; terms can be verbal or written. Important terms are usually labeled as conditions. Less important terms are often called warranties. Conditions are a backbone of a good contract; without them, the contract is unlikely to be signed by both parties. Violation of conditions is a serious offense, and a party can consider the contract voided if another party breaches a condition.

Avoiding Disputes Over Express Terms

To reduce the risk of disputes under express terms contract law:

  • Draft terms in clear, precise language to avoid ambiguity.
  • Identify whether each term is a condition, warranty, or innominate term.
  • Ensure all negotiated terms are recorded in writing and signed by both parties.
  • Review standard form contracts to confirm they reflect the intended agreement.
  • Keep records of all pre-contractual discussions, as they may influence interpretation.

Well-drafted express terms not only clarify obligations but also reduce the likelihood of costly litigation.

Frequently Asked Questions

1. What is the main difference between express and implied terms?

Express terms are explicitly stated in a contract, while implied terms are not written or spoken but are recognized by law or custom.

2. Can an oral agreement form part of an express contract?

Yes, oral agreements can be binding express terms if there is sufficient evidence of mutual consent and consideration.

3. Do express terms override implied terms?

Generally, yes—express terms take precedence unless they conflict with statutory implied terms that cannot be excluded.

4. What happens if an express term is ambiguous?

Courts interpret ambiguous terms based on their plain meaning, the contract’s overall context, and industry norms.

5. Can parties add express terms after signing a contract?

Only if both parties agree to a formal amendment or variation of the original contract.

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