Express Contract: What it Is and How it Works
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What is an Express Contract?
An express contract is an agreement that has been wholly spelled out either in writing or orally. This contract includes at least two parties who make legal promises to fulfill set/specified terms toward each other. They agree to be legally bound by these terms according to the law.
Like all contracts, an express contract requires a mutual intent by all parties involved to be bound by the agreement. It requires the terms to be made so that all parties and those responsible for enforcement of the contract can understand.
The contract must also have a definite offer, unconditional acceptance, and some form of consideration. In addition, both parties must offer something to the other in the contract process. The offering may be monetary but is not always.
Here is an article about what express contracts are.
How Express Contracts Work
Express contracts work when all parties to the contract make a specific statement, either in writing or orally (or sometimes a combination of the two) that specific terms will bind them. Then, the two or more parties are required to accept the contract and fulfill their obligations or suffer any loss stipulated in the contract.
Once this type of contract has been entered into, the parties are legally bound unless an exit or cancellation clause exists. In that case, the parties must fulfill the obligations of the cancellation clause, which may include losing something of value in the process.
If the parties to the contract do not fulfill their obligations, they risk losing even more due to violating the agreement. If the contract is legally enforceable, they could also risk legal action.
Here is an article about how express contracts work.
Types of Contracts
Expressed contracts have been explicitly stated and defined between the parties. The agreement in this type of contract is very clearly stated so that both parties know what’s being agreed to.
The alternative to an express contract is an implied contract, which is more ambiguous. In implied contracts, the parties make an agreement that is not explicitly stated but occurs due to obligation or an understanding between the parties.
Implied contracts can be ‘in fact’ or ‘in law.’ Contracts occur when, for example, a service is performed. Then, in this example, the implied agreement is that the service will be paid for.
Implied contracts can be ‘in law’ if the actions of one party would be considered an unjust or unfair benefit to the other if no compensation were given. It occurs when there is an implied duty for the party to pay the second party even if no formal contract exists.
Here is an article about types of express contracts.
Difference Between Implied Contract and Express Contract
There are several differences between implied and express contracts that will help you create the specific type of contract you need.
- Spelled Out. These contracts are spelled out, while implied contracts are more ambiguous.
- Explicit. These contracts can be written or spoken but are still explicit.
- Specification. Implied contracts are formed when parties demonstrate an agreement without specifying it.
- Details. An express contract includes all details such as deadlines and payment dates, while an implied contract may only have generalities for these if they have been mentioned at all.
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Examples of an Express Contract
There are several different ways to consider an express contract legally binding. So, let’s take a look at several various contracts and examples.
- A written contract for the renovation of your home
- A written contract for a landscaper to take care of your lawn
- A written contract for a tutor to teach your children
- An oral agreement to sell an item for a listed price
- An oral agreement to pay a neighborhood kid a set amount to rake your leaves
- An oral agreement to pay the babysitter a set amount for watching your kids
These contracts are considered different from implied contracts, which may not be explicitly stated or agreed to. Implied contracts are formed simply because two parties act in a way that makes it seem as though they agree.
This could be an individual ordering food in a restaurant, assuming they expect to pay for that food. Likewise, having someone clean your home even without an express contract implies that you will pay them after the work is completed.
In these situations, the acting individual can reasonably assume that the work will be completed and will be compensated. This is compared to an express contract where the two parties lay out the terms in advance, either orally or in writing.
Here is an article with examples of express contracts.
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How Do You Make an Express Contract?
To make an express contract, you need at least two parties and something that the two parties can agree to do for one another.
- Step 1. Locate the parties to the contract.
- Step 2. Determine what the first party will offer to the other(s).
- Step 3. Determine what the second (and subsequent) party will offer to the first party in consideration for their offer.
- Step 4. Agree to exchange the item/service/etc. of party one for the item/service/payment/etc. of party two.
- Step 5. State the terms of the agreement orally to one another or write them down.
- Step 6. The first party performs the action specified in the agreement.
- Step 7. The second (and subsequent) party is then obligated to fulfill their portion of the agreement that was initially made or risk being in breach of contract.
The steps to create an express contract are pretty simple, but the key is that the terms, what each party is offering, are clearly stated. This means that anyone reading the contract or being told what was said will know precisely what the agreement is. They will also see how that agreement can be fulfilled.
Working with a contract lawyer to draft a contract will ensure it is entirely legal. They can also oversee the contract signing or give you more information through a contract clause guide.
Here is an article about how to create an express contract.
How Do You Make an Implied Contract?
Implied contracts are pretty simple to make because they do not require anyone to agree to anything formally. For example, telling the neighborhood kid that you would like them to cut your lawn can be considered an implied contract.
In this situation, the neighborhood kid may come to your house and say they mow lawns and rake leaves for $15. If you say ‘okay, cut my lawn,’ you have entered into an implied contract. It is expected that the kid will cut your lawn and that you will pay them the $15.
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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
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