What is an express contract? Notable features and differences

Contracts are the glue that binds businesses and individuals together, forming the legal framework for countless agreements in modern commerce. Among the various types of contracts, express contracts stand out for their clarity and specificity.

Main takeaways from this article:

• An express contract is a clearly defined and communicated agreement with specific terms between parties. Key features include mutual agreement, consideration, awareness, legal purpose, and explicit terms.
• While implied contracts are inferred from behavior or circumstances, express contracts are formed through explicit agreements. Express contracts can be oral, unilateral, or bilateral, depending on the nature of the promises made by the parties involved.
• Benefits of express contracts include reduced risks, enhanced operational efficiency, and better legal enforceability.
• DocJuris helps businesses accurately screen, review, and manage express contracts, ensuring legal soundness.

What is an express contract?

An express contract is a legally binding agreement between two or more parties in which the terms of the agreement are explicitly stated. These terms can be communicated verbally or written down, creating a clear understanding of each party's obligations and expectations. Unlike implied contracts, which arise from conduct or circumstances, express contracts leave no room for misinterpretation.

Examples of express contracts

Express contracts are used for many business operations, enabling faster transactions and building trust among stakeholders. Below are some typical examples:

• Sales contracts: These agreements outline the purchase and sale of goods, specifying details like price, quantity, delivery terms, and payment schedules.
• Employment contracts: These contracts define the employer-employee relationship, outlining responsibilities, compensation, benefits, termination clauses, and intellectual property ownership.
• Lease agreements: These contracts govern the rental of property, including lease duration, rent amount, maintenance responsibilities, and any restrictions on the property's use.
• Service contracts: These agreements outline the scope of services a provider agrees to deliver to a client, along with the associated fees, deadlines, and performance expectations.
• Loan agreements: These contracts detail the terms of a loan, including the principal amount, interest rate, repayment schedule, and collateral requirements (if any).
• Partnership agreements: These agreements define the terms of a business partnership, outlining profit-sharing, decision-making procedures, and dispute-resolution mechanisms.

Key features of an express contract

Now that you understand what an express contract is, let's explore the key features that define them:

Mutual agreement of parties involved

All parties to the contract must willingly agree to the stated terms. There can be no coercion or undue influence.

Mutual agreement occurs when the involved parties explicitly consent to the contract terms, creating a shared understanding or "meeting of the minds." This ensures that both participants have a clear intent and understanding, making the agreement grounded in mutual assent and legally binding.

Consideration

This refers to the value exchanged between the parties within an express contract. This element is crucial as it indicates a mutual agreement to honor commitments.

Consideration can take various forms, such as monetary payment, services, a promise to do something (or not do something), or other benefits, solidifying the contract's enforceability by affirming that each party gains something of value from the arrangement.

Awareness and capacity

These are pivotal elements in express contracts, ensuring all parties understand the agreement and have the legal ability to enter into it. The parties must be mentally competent and aware of the agreement's terms.

This mutual understanding, known as the "meeting of the minds," is essential. Without capacity, any contract may be deemed voidable, highlighting the importance of both informed consent and legal competence.

Legal purpose

The purpose of an express contract must comply with all legal requirements and should not violate any laws. If the purpose of the agreement involves illegal activities, the contract will be deemed void and unenforceable.

Having a clear legal purpose ensures that the agreement operates within the bounds of the law, protecting all stakeholders involved and ensuring contract enforceability in legal settings.

Express terms

Express terms play a crucial role in an express contract, as they outline the specific details that both parties have explicitly agreed upon.

These terms must be clear and unambiguous, covering all the rights and obligations. This clarity ensures that each party understands the precise stipulations governing their agreement, aiding in smooth execution and enforceability.

Comparing express contracts with other types of contracts

Understanding the differences between express contracts and other types of contracts is crucial for businesses. Let's explore how express contracts compare to implied contracts, oral contracts, unilateral contracts, and bilateral contracts.

Difference between implied and express contracts

Implied contracts, also known as implied-in-fact contracts, arise from the conduct or circumstances of the parties rather than explicit agreements. While not explicitly stated, these contracts are inferred from the parties' actions or the surrounding circumstances.

Here's what characterizes an implied contract:

• Implied by conduct: The parties' behavior or actions suggest an agreement exists.
• Constructive context: The agreement emerges from the situational context, making it less formal and sometimes more ambiguous in nature.
• No explicit documentation: Unlike express contracts, implied contracts often lack formal documentation or verbal acknowledgment.
• Reliant on reasonable expectations: The obligations and expectations are based on the parties' understanding and the community's norms, making assumptions about the intended agreement.
• Benefit and acceptance: One party benefits from the other's actions, and the recipient accepts the benefit.

Key differences between express and implied contracts

Now let's explore how express contracts stack up against implied contracts in terms of:

• Clarity of terms: Express contracts are explicitly stated, leaving little room for ambiguity. The terms and conditions are clearly defined and understood by both parties. In contrast, implied contracts are inferred from actions or circumstances, making the terms less explicit and potentially open to interpretation.
• Formation method: Express contracts are formed through written or oral agreements where the parties explicitly express their intentions. Implied contracts, on the other hand, arise from the parties' conduct and behavior without a formal agreement being stated.
• Proof of agreement: The presence of a documented agreement in express contracts makes them easier to enforce legally. However, implied contracts, relying on circumstantial evidence, can be more challenging to prove and enforce legally.
• Intent: With express contracts, the parties' intent to form a contract is clearly stated or implied. This makes it easier to establish the existence of the agreement and its terms. Implied contracts may involve inferred or assumed agreements based on behavior, making the intent less explicit and potentially subject to dispute.

Relationship between express contracts and other contract types

Other types of contracts, including oral contracts, unilateral contracts, and bilateral contracts, can often be characterized as express agreements. Let's see how:

Oral contracts

Oral contracts are express contracts formed through spoken words rather than written documents. While less formal than a written contract, an oral contract can still be legally binding if it meets the essential elements of an express contract.

Express nature of oral contracts

Oral contracts can be considered express contracts if they clearly define the terms, involve mutual agreement, include a legal exchange of value, and are entered into by parties with the legal capacity and for a lawful purpose.

Unilateral contracts

Unilateral contracts are express contracts where one party makes a promise in exchange for a performance by the other party. The offeror promises a reward or benefit if the offeree performs a specific action. Some examples of unilateral contracts can be:

• Reward offers: Offering a reward for the return of a lost item.
• Contests: Promising a prize for winning a contest.
• Options contracts: Granting an option to buy or sell something at a specified price within a certain timeframe.

Express nature of unilateral contracts

Unilateral contracts may be considered express because the offeror's promise and the offeree's performance are clearly stated. The offeror's promise is the express term of the contract, and the offeree's performance is the consideration.

Bilateral contracts

These are express contracts in which both parties make promises to each other. They are the most common type of contract in business. Some examples include:

• Sales contracts: Under these contracts, buyers promise to pay for goods or services in exchange for the sellers' promise to deliver them.
• Employment contracts: An employer promises to pay wages in exchange for the employee's promise to perform work.
• Lease agreements: A landlord promises to provide property in exchange for the tenant's promise to pay rent.

Express nature of bilateral contracts

Bilateral contracts are explicitly expressed because both parties' promises are clearly stated or implied. The exchange of promises constitutes the express terms of the contract.

What are the benefits of an express contract?

Express contracts, with clearly articulated terms, offer substantial benefits that cater to various business needs. In this section, we will explore the advantages of adopting express contracts.

Establish clear agreements

Express contracts eliminate ambiguity by explicitly outlining the terms and conditions of the agreement. This ensures that all parties involved have a clear understanding of their rights, obligations, and expectations. This clarity minimizes misunderstandings and disputes, leading to smoother and more efficient business relationships.

Provide legal certainty and enforceability

A well-drafted express contract provides a strong legal foundation for businesses. If a breach of contract occurs, the contract serves as evidence in court, allowing for legal recourse. This certainty enhances the predictability and stability of business transactions, fostering trust and confidence among parties.

Reduce risks and liabilities

Express contracts help mitigate risks and liabilities by defining the scope of each party's responsibilities. By clearly outlining obligations, express contracts reduce the chances of disputes arising from misunderstandings or unfulfilled expectations. This can save businesses time, money, and resources that might otherwise be spent on legal battles.

Ensure proper documentation for enforceability

Having a written express contract serves as valuable evidence in case of disputes. The contract documents the agreed-upon terms, providing a clear record of the parties' intentions and obligations. This documentation can be crucial in proving the existence and terms of the agreement, especially if the contract is challenged in court.

Enhance operational efficiency

Express contracts streamline operations by providing a clear framework for business relationships. By establishing expectations, timelines, and responsibilities upfront, express contracts reduce the need for constant negotiation and clarification. This clarity and efficiency can improve productivity, reduce costs, and facilitate smooth project execution.

How DocJuris helps businesses manage express contracts

Managing a large volume of express contracts can be overwhelming. At DocJuris, we provide an AI-powered contract management platform that streamlines this workflow with features designed to expedite the review of express contracts and ensure accuracy. In doing so, we can reduce the administrative burden on you and your team.

Here's how the DocJuris platform empowers businesses with efficient express contract management:

• Accurate screening and review: DocJuris leverages advanced AI technology to meticulously screen and review express contracts. This includes identifying missing or unclear terms and potential inconsistencies and ensuring alignment with industry standards. This comprehensive review minimizes the risk of overlooked details that could lead to future disputes.
• Centralized repository: The platform allows users to store all contracts in a secure, easily accessible cloud-based platform. This eliminates the need for paper files and facilitates easy retrieval and collaboration.
• Streamlined contract management process: DocJuris offers a user-friendly platform for storing, organizing, and tracking all express contracts in one central location. This eliminates the need for scattered files and ensures easy access for authorized personnel. DocJuris provides automated workflows for contract approvals and revisions, saving valuable time and effort.

By leveraging our platform's advanced capabilities, businesses can ensure their express contracts are clear, comprehensive, and legally sound. This not only fosters stronger business relationships but also minimizes legal risks and promotes operational efficiency.

Curious to see the DocJuris platform in action? Contact our team today to request a demo.

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