Express Contracts: Everything you need to know

Creating a formal agreement is essential, and it provides clarity and security for all parties involved. Express contracts are a specific type of agreement that many businesses find a valuable tool for clearly outlining the rights and responsibilities of parties involved in the contract.

In this article, we will explore the key components of express contracts and how they can benefit businesses in ensuring smooth transactions and avoiding misunderstandings.

Understanding the importance of express conditions in contract law can help businesses establish strong relationships with their partners and clients, which can lead to a successful business venture.

What is an Express Contract Law?

An express contracts is a legal agreement where parties openly spell out the contract terms, either orally or in writing.

Express contract stands out from other agreements, such as implied contracts, which are formed through the actions or conduct of the parties involved. Express contracts are widely used in many businesses because they clearly outline the expectations and responsibilities of all parties involved.

There are two terms of express contract:

• Oral Express Contract: It can be just as legally binding as written terms, as long as they can be proven in court. For instance, consider a job interview where the employer verbally offers a specific salary and benefits package, which can be viewed as an oral term of an express contract if accepted by the employee.
• Written Express Contract: This is one of the safest and most convenient forms of express contract. Business transactions and other formal agreements are commonly documented through written express contracts to avoid future misunderstandings.

Examples of Express Contracts

Express contract laws are easy to manage and are legally enforceable. So, it becomes a preferable option for many industries. The following are some examples of an express contracts:

• Sales Contracts: When you sell a product, you establish an express contract with the buyer. This contract outlines the terms of the sale, including price, delivery date, and warranties. Drafting the terms of the sale helps to prevent misunderstandings and disputes between the buyer and seller.
• Employment Contracts: When a company hires an employee, it should mention the terms of employment, such as salary, benefits, and job responsibilities. So that individuals involved in an express contract are aware of their rights and obligations.
• Lease Agreements: This is another example of an express contract. Nowadays, many landowners use lease agreements to clearly outline the terms of the rental, including rent amount, duration of lease, and any rules or restrictions. So that both parties can avoid confusion and potential disagreements throughout the duration of the lease.
• Service Contracts: If you are running a business that provides services, it is important to have service agreements in place. These contracts explain the work quality, payment terms, and other important details. This can help prevent misunderstandings and disputes down the line.
• Loan Agreements: Generally, this agreement states the terms of the loan, including the interest rate, repayment schedule, and penalties of non-payment. This shows that it is an example of an express contract that helps both the lender and borrower to understand their promises and rights.
• Partnership Agreements: A Partnership in a business involves two or more individuals coming together to share profits and losses. So, the partnership agreement should include detailed information about the partners’ roles, profit-sharing arrangements, decision-making processes, and dispute resolution procedures in order to safeguard both parties.

Elements of an Express Contract

Express contracts are valid and enforceable only if the agreement includes the following elements:

Offer & Acceptance:

It is the primary elements of an express contract, where one party creates an offer, and the other party provides acceptance of that offer.

Consideration

It involves the exchange of something of value between the parties, such as money, goods, or services. This element ensures that both parties are giving and receiving something in return for their obligations outlined in the contract.

Mutual Intent

The most essential element of an express contract is mutual intent, where both parties must have a clear understanding and agreement on the terms and conditions of the contract.

Contractual Capacity

To validate the contract, both parties must have the legal capacity to enter into a contract. If one party is below the legal age of consent or lacks the mental capacity to understand the terms of the agreement, the contract may become voidable.

Legality of Purpose

It is essential for contracts to have a clear and legal purpose to be valid and enforceable in a court of law. If the purpose of the contract is illegal or against public policy, the contract will be considered void.

Consulting a legal professional before entering into a contract is always helpful to ensure that all aspects of the agreement are legally sound and enforceable.

Benefits of an Express Contract

There are several advantages to having a well-written express contract law. Here are some of its benefits:

• Set clear terms of agreement
• Ensure legal clarity and enforceability
• Minimise risks and liabilities
• Maintain thorough documentation for enforceability
• Improve operational efficiency

Express Vs Implied Contracts

Understanding the differences between express and implied terms contract law is crucial for businesses. The following table summarises the key distinctions between the two types of contracts:

Aspect	Express Contract	Implied Contract
Clarity of terms	Express contracts are formed through explicit agreements between parties, where all terms and conditions are clearly stated either verbally or in writing	Implied contracts are formed based on the actions and conduct of the parties involved, without any explicit agreement
Example	Signing a rental lease agreement, where all the terms and conditions are clearly outlined	Ordering a meal in a restaurant and then paying for it without any verbal agreement being made
Formation method	Formed through written or verbal agreements	Formed through the actions and conduct of the parties involved
Proof of agreement	Can be easily demonstrated through written or verbal documentation	It may require evidence of the actions
Intent	Explicitly stated within the terms of the agreement	It may be inferred from the circumstances and actions of the parties involved, rather than explicitly outlined

When do you need an Express Contract?

• Express contracts are needed for clarity and specificity in the terms of the agreement. Here are some notable situations of where the express contracts are used:
• Complex Transactions: When complex transactions involve a large sum of money or intricate details, an express contract helps them by clearly outlining the rights and responsibilities of each party involved.
• Formal Relationships: To maintain a formal relationship, such as in business partnerships or employment agreements, an express contract is necessary to ensure that all parties are clear on their obligations and expectations.
• Legal Requirements: The legal requirements may necessitate the use of contracts to protect the interests of all parties involved. Additionally, contracts can serve as evidence in case of disputes or misunderstandings that may arise in the future.

Conclusion

An express contracts are the easiest type of contract to create and is helpful to build a professional relationship. However, it is always advisable for the parties involved to seek legal advice to ensure that the contract is legally binding and enforceable. This step will help prevent any potential issues or disputes in the future.

Editorial Reviewer – Legal & Compliance

Written by Mounika