When it comes to contracts, there are two distinct types: express contracts and implied contracts. Both types of contracts are legally binding agreements between two parties, but the difference lies in how they are formed.
An express contract is created when two parties verbally or in writing agree to a set of terms, while an implied contract is an agreement that is inferred from the actions of the parties involved. Here, we will discuss everything you need to know about express contracts vs. implied contracts.
Express Contracts vs. Implied Contracts
| Express Contract | Implied Contract |
|---|---|
| An express contract is formed when the parties involved explicitly state the terms and conditions of the agreement, either in writing or verbally. | An implied contract is formed when the parties involved do not explicitly state the terms and conditions of the agreement, but their actions or conduct imply an intent to enter into a contract. |
| It require a clear and explicit offer and acceptance, and may require consideration (e.g., payment or promise to pay). | They are formed based on the parties’ conduct, actions, or circumstances that suggest an intention to create a legal contract, even if not explicitly stated. |
| In express contracts, the terms and conditions are explicitly stated, leaving little room for interpretation or ambiguity. | In implied contracts, the terms and conditions may be implied from the parties’ conduct or industry customs, and may be subject to interpretation or ambiguity. |
| They are generally more easily enforceable, as the terms and conditions are clearly defined and agreed upon by the parties. | They may be less enforceable, as the terms and conditions may be subject to interpretation or ambiguity, and may require additional evidence to prove the existence of the contract. |
| In express contracts, the parties are obligated to fulfill the terms and conditions as explicitly stated in the contract. | In implied contracts, the parties are obligated to fulfill the terms and conditions that may be implied from their conduct or industry customs, even if not explicitly stated. |
| These contracts require a clear offer, clear acceptance, and consideration (payment or promise to pay) for their formation. | These contracts can be formed without a clear offer or acceptance, and consideration may not always be required. |
What is an express contract?
An express contract is a contract that is created by the parties involved clearly expressing their agreement in words, either orally or in writing.
This type of contract requires a clear expression of intent from each party, including an offer and acceptance. It is a specific contract where all the details of the agreement are agreed upon by both parties and put into writing.
This means that any dispute or misunderstanding can be quickly resolved by referring to the written document. An express contract spells out all the terms of the agreement in writing.
What is an implied contract?
An implied contract is a type of contract that is created based on the behavior and actions of two or more parties, rather than by explicitly stating the terms in writing. Unlike an express contract, which is created when the parties clearly state their agreement and its terms in writing, an implied contract relies on the parties’ conduct to determine its terms and enforceability.
In an implied contract there is no requirement of a verbal or written agreement between two or more parties, Instead, the parties’ behavior and actions imply an agreement, even if one is not stated.
For example, if you enter into a restaurant and are given a menu, you are likely entering into an implied contract with the restaurant to provide you with the service they advertise on the menu.
In addition, implied contracts usually require both parties to act in good faith and be honest with each other. This means that both parties should do what they said they would do and fulfill their obligations under the agreement. If one party breaches their obligation, then the other party may be able to pursue legal action.
So an implied contract relies on the conduct of the parties to determine its terms and enforceability.
Key differences between express and implied contracts
The main difference between express contracts and implied contracts is the formation of the contract. Express contracts are created through an explicit agreement, either verbal or written, between two parties. On the other hand, implied contracts are formed when both parties conduct their business in a way that implies an agreement exists, even though there is no actual verbal or written agreement between the two parties.
Express contracts are much more formal than implied contracts and typically require consideration from both parties in order to be legally binding. Implied contracts, on the other hand, do not require consideration to be legally binding. Additionally, the terms of an express contract can be changed or modified at any time as long as both parties agree, while the terms of an implied contract cannot be changed without agreement from both parties.
Furthermore, express contracts are enforceable by law while implied contracts are only enforceable if one of the parties fails to fulfill their obligations. Lastly, express contracts are usually more detailed and specific in terms of what each party is responsible for than implied contracts.
This allows each party to clearly understand their rights and duties in regard to the contract, which helps reduce potential disputes or misunderstandings. In contrast, implied contracts often contain broad language which may leave some responsibilities open to interpretation. As a result, it is important for all parties involved in an implied contract to carefully read over the contract before signing it, to ensure everyone understands their responsibilities.
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Which type of contract is better?
When deciding which type of contract is better for a particular situation, it is important to consider the differences between an express contract and an implied contract. An express contract is a formal agreement that is created when parties verbally or in writing agree on certain terms. The terms are spelled out clearly, making the contract more binding than an implied contract. On the other hand, an implied contract is formed when the parties’ actions demonstrate an agreement between them, even though no verbal or written agreement exists.
An express contract is often preferred over an implied contract because it provides clear rules that both parties must abide by. With an express contract, there is less ambiguity and more certainty as to what is expected from each party. On the other hand, an implied contract can be difficult to enforce due to its lack of specificity and the parties’ intentions can be harder to prove.
It is important to consider the difference between express and implied contracts when determining which type of contract is best for a given situation. If you require detailed rules that are easy to enforce, then an express contract might be the better option.
If you want something more flexible that can accommodate various changes over time, then an implied contract might be better. Ultimately, the decision of which type of contract is better depends on the specific needs of the parties involved.
Examples of express and implied contract
Examples of express types of contracts include verbal agreements, written contracts, or signed documents. In order to be considered valid, the offer and acceptance must be given in a clear and unambiguous manner.
An implied contract is an agreement that is created when two parties exchange goods or services for money. It does not require any direct, explicit words or actions and can be formed by mere conduct. Examples of implied contracts include product warranties, rental agreements, and employment contracts.
The distinction between express contracts and implied contracts is the way the contract is created. With an express contract, there must be direct, explicit words or actions from both parties in order to create the agreement. With an implied contract, no direct, explicit words or actions are necessary – the agreement is formed by conduct.
