What is an express contract?
How are express contracts formed?
What is the difference between express contract vs implied contract?
In this article, we will break down the concept of an express contract so you know all there is to know about it.
We will provide you with its legal definition, see an express agreement is formed, look at its components, content, how to prove its existence, its enforceability, go over some express contract examples and more.
Are you ready to find out what we have in store for you?
Let’s dive right in.
Let’s start by going over the definition of express contract and how it is legally defined.
What is an express contract?
An express contract is a type of contract where the parties explicitly set out the terms of their legally binding agreement and express their intention to be bound by the contract terms.
The contracting parties can use words, orally or in writing, to clearly manifest their intention to be bound by the terms of the contract.
For an express contract to be formed, its terms must be unequivocally accepted by the parties.
There must be no ambiguity as to whether the parties intended to form a contract or not.
Based on the interaction of the parties, their express promises and their explicit manifestation of their intention to be bound by the terms of a contract, an express contract is formed.
Express contract definition
According to Cornell Law School’s Legal Information Institute, express contract is defined as follows:
“An express contract is an exchange of promises in which the terms by which the parties agree to be bound are declared either orally or in writing, or a combination of both, at the time it is made.”
What’s notable from this definition is that the parties have “declared either orally or in writing” the terms by which they agree to be bound.
In other words, the parties have explicitly manifested their agreement and its terms.
Formation of an express contract
To form an express contract, the required components are the standard contract formation requirements.
For a contract to be formed, you generally need to have the following:
An express contract, whether oral or written, is formed when there is “mutual assent” or the “meeting of the minds”.
The elements of an express contract are clearly expressed and defined such as:
- There is a clear offer
- There is a clear acceptance of the offer
- The mutual assent is clear and unmistakable
Be sure to read our post on the essentials of a valid contract for more insights on contract formation.
To have an express contract, you must have an offeror make an express offer to the offeree.
An express offer or express promise is a person’s clear and unequivocal proposal to be bound by the terms of the offer if the offeree accepts.
When there is a mutual exchange of promise and acceptance, an express contract is formed.
As an example, if I offer to sell you my automobile for $10,000, that’s an example of an express offer.
The parties are clear, the consideration is clear and the obligations are clear.
Once an offeree receives a clear and express offer, an express contract is formed when the acceptance is clear.
For example, if you wish to renovate your kitchen and have negotiated the scope of the renovation project, price and timeline with a contractor.
The contractor provides a written offer outlining the terms based on which he or she can agree to do the job.
You read the offer and accept it by initialling all pages and signing the signature page.
You are effectively expressly accepting the contractor’s offer.
The essence of an express contract is that the parties have clearly, absolutely and unequivocally accepted the terms of the contract and agreed to be legally bound by them.
There must be absolute acceptance.
If there’s ambiguity about whether a person accepted or not a contract, you may not be in the presence of an express contract and a court may not quality the agreement as such.
Content of express contracts
The terms of express contracts are generally clearly set out and expressed.
Since the terms and conditions of expressed contracts are clearly set out, the parties will have a clear idea as to their rights and obligations.
Express contracts will have express terms.
In other words, the parties will explicitly express the object of the contract, the quantity of what’s purchased, timelines, special obligations, the place where services must be rendered or product delivered and so on.
The parties are free to define what terms to include in their contract.
When the terms have been explicitly set out and the parties have explicitly accepted to be bound by such terms, you have an express contract.
Proving the existence of an express contract
The existence of an express agreement is proven by the actual written contract of the parties or their verbal statement that they agree to the terms of the contract.
To determine if an express contract was formed, the courts will assess the communication of the parties, either written or verbal, expressing their intention to be bound by the terms of the contract.
For example, if you purchased an automobile and signed a purchase contract, you have expressly manifested your agreement to buy a car by signing the contract.
Your agreement is therefore express and the written contract proves the existence of your express contract or agreement to buy the car.
You can also express your acceptance of the contract orally.
If you offer to sell your bike to John for $100 and John states that he agrees to buy the bike for that price, you have an express contract.
John’s words have clearly communicated his intention to be bound by the terms of your offer.
On the other hand, the existence of implied contracts is proven by the circumstances and the conduct of the contracting parties.
Is an express contract enforceable?
An express contract is enforceable just like any other legally binding contract.
As a result, a party breaching the terms of an express contract may be condemned to pay damages or compensate the non-breaching party for damages or injuries suffered.
For example, imagine you hired a contractor to renovate your kitchen by signing a written and express contract.
You paid the contractor full price but he or she has failed to deliver the project and has not done the work in accordance with the agreement.
The contract breached the terms of the express contract.
You can enforce your contract in court by demanding specific performance or requesting monetary damages.
Express contract vs implied contract
An interesting question that we must tackle is to understand what is the difference between express and implied contracts?
Express contracts are contracts where the parties have expressed in unambiguous the terms by which they agree to be bound.
Implied contracts or an implied-in-fact contract is a legally formed contract where the contracting parties have not clearly manifested their agreement to be bound by its terms.
The acceptance or manifestation of the parties’ acceptance is factually implied.
Where an express contract can be formed either in writing or orally, an implied contract is formed without a written document.
The circumstances of the parties, their actions and behaviour can lead a court to conclude that the parties are clearly obligated towards one another in a contract.
For example, if you go to a restaurant, sit down at a table, order from their menu and eat your meal.
During this entire time, you did not enter into an express contract with the restaurant owner.
However, through your actions, you are clearly bound to pay the price of what you consumed.
That’s an implied contract.
Express contract vs quasi-contract
A quasi-contract is an obligation imposed by law to prevent a person from taking advantage of another or unjust enrichment.
A quasi-contract is an obligation created by a judge or by the operation of the law on a person in favour of another even though the parties did not enter into a contractual relationship.
The creation of a quasi-contract is irrespective of the intention of the parties to enter into a contract or not.
You can consider a quasi-contract to be a fictional contract.
On the other hand, an express contract is one where the parties had a clear intention to enter into a contract.
Also, their intention to be bound by the contract is clearly communicated.
Express contract example
To better understand express contracts, let’s look at a few examples.
We’ll look at an example of a written express contract and an oral written contract.
Written express contract example
You are looking to hire a contractor to renovate your kitchen.
Before actually hiring the contractor, you’ll probably negotiate the scope of the renovation, cost and timelines.
Once you reach an agreement, the contract takes out a contract, outlines the content of your agreement in terms of scope of the project, costs and timelines and you both sign the contract.
This is an express contract.
Because your agreement with the contractor is explicitly spelled out in the contract and you have both expressed your clear intention to be bound by the contract by signing it.
Oral express contract example
You are looking to sell your computer to buy a new one.
You list your computer online for sale.
A person shows up at your house to negotiate the price of your computer.
After some negotiations, you agree to sell your used computer for $500.
You just entered into an oral express contract.
The obligations of the parties are clear and the intention to buy and sell the computer is clearly manifested verbally.
An express contract can be in writing or oral.
It is a contract where the parties to the contract clearly exchange a mutual promise to be bound by certain obligations and expressly demonstrate their intention and willingness to be legally committed to executing their obligation.
You can distinguish an express contract with an implied contract by the manner they are formed.
Where an express contract is formed with the parties clearly manifesting their desire to be bound by the contract, implied contracts are considered formed by assessing the actions of the parties without consideration of their intention.
Be sure to read our highly interesting post on the Lucy v Zehmer case brief where provide you with an overview of the objective theory of contracts.
Express contracts are formed in the same way as any other contract is formed.
There must be an offer, acceptance, consideration, object and capacity.
They can also be enforced in court just like any other legally binding contract.
Do you have an interesting case law to share with us where the courts have assessed the concept of express contract?
We would love to hear from you!