Understanding the Difference Between Express and Implied Contract

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Close-up of a person signing a contract on a clipboard, focusing on legal formalities.
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An express contract is a contract where the terms and conditions are explicitly stated, and both parties agree to them. This type of contract is often written down, such as in a sales agreement or employment contract.

Express contracts are typically formal and explicit, with all the details spelled out. In fact, a sales agreement is a classic example of an express contract, where the terms of the sale are clearly outlined.

Implied contracts, on the other hand, are not explicitly stated, but rather inferred from the actions and behavior of the parties involved. For instance, if someone hires a contractor to fix a leaky faucet, an implied contract exists, even if no written agreement is signed.

What Is a Contract?

A contract is a legally binding agreement between two or more parties that outlines the terms and conditions of a deal.

It's a written document that can be as simple as a handshake or as complex as a multi-page agreement.

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A contract can be formed through various means, including verbal agreements, written contracts, or even implied actions.

It's essential to understand that a contract must have three essential elements: offer, acceptance, and consideration.

For instance, if you offer to buy a car for a certain price and the seller accepts, a contract is formed.

A contract can be breached if one party fails to fulfill their obligations, resulting in legal consequences.

Types of Contracts

There are several types of contracts that can be used in various situations. A bilateral contract is one where two parties exchange promises, such as when you agree to buy a house and the seller agrees to sell it to you.

A unilateral contract is one where only one party makes a promise, such as when a company offers a reward for completing a task. Contracts can also be either fixed-term or indefinite, with fixed-term contracts having a specific end date and indefinite contracts continuing until one party gives notice.

Express contracts are a specific type of contract where the terms are explicitly stated, and implied contracts are those where the terms are not explicitly stated but can be inferred from the circumstances.

Types of Contracts

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There are two main types of contracts: express contracts and implied contracts. Express contracts are explicit agreements that clearly state the terms and conditions, either in writing or verbally. They leave no room for ambiguity and provide a clear record of the parties' intentions.

An express contract is enforceable if the criteria are met, but it can be unenforceable if one or more of the following conditions are present: unconscionability, illegal subject matter, mistake, or force majeure.

Express contracts are often formal and documented, involving written agreements that outline the terms and conditions in detail. This formality provides a clear record of the parties' intentions, making it easier to prove the existence and terms of the contract in legal proceedings.

An implied contract, on the other hand, arises from the conduct, actions, or circumstances of the parties. The terms are not explicitly stated but are inferred from the behavior or dealings of the parties involved.

Implied contracts can be implied-in-fact, based on the conduct of the parties, or implied-at-law (quasi-contracts), where the law imposes an obligation to prevent unjust enrichment. They can be less formal and may not involve written documentation, making it challenging to establish the existence and terms of the implied agreement.

Elements of a Contract

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A contract is a fundamental aspect of any agreement, and understanding its elements is crucial.

Mutual agreement is a key element of a contract, even if it's not explicitly stated. This can be inferred from the actions or circumstances of the parties involved.

To be considered a contract, there must be a legal obligation for the parties involved. This means that the actions or circumstances suggest that the parties intended to enter into a contract.

Implied contracts are designed to prevent unjust enrichment, where one party benefits unfairly at the expense of another. This is especially relevant in implied-in-law contracts.

One party typically receives a benefit while the other incurs a detriment, which further implies a contractual relationship. This can be seen in everyday interactions, such as dining at a restaurant or hiring a taxi.

Contract Enforceability

Implied contracts are legally enforceable, just like express contracts, but their enforceability depends on the specific circumstances and jurisdictional law.

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Courts typically consider the conduct, actions, and intentions of the parties involved to determine the terms of the implied contract.

Implied contracts may face challenges in terms of enforceability, as determining the precise nature of the agreement can be more complex, and their enforcement may depend on specific facts and circumstances.

In general, implied contracts are subject to interpretation, and their clarity and certainty are lacking compared to express contracts.

Clarity

Clarity is a crucial aspect of contract enforceability. Express contracts are known for their clarity and certainty, as the terms are explicitly laid out, reducing the likelihood of misunderstandings or disputes.

The explicitness of express contracts is particularly advantageous when disputes arise, as the terms of the agreement are readily available for reference. This clarity helps to reduce the risk of misinterpretation and ensures that both parties understand their respective rights and obligations.

Implied contracts, on the other hand, may lack the same level of clarity. Since the terms are not expressly stated, there is a higher risk of misunderstanding or disagreement about the nature and extent of the implied agreement.

Determining the precise nature of an implied contract can be more complex, as it often depends on subjective interpretations of the parties' actions. This can lead to legal challenges and make it more difficult to enforce the contract.

Return

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Return is a crucial aspect of contract enforceability, especially when it comes to implied contracts. An implied-in-fact contract can be valid if both parties have an offer and its acceptance, mutual agreement, and consideration.

To determine if a contract is implied-in-fact, you need to look for these three key elements. An offer and its acceptance are the foundation of any contract, and mutual agreement is necessary to create a binding contract. Consideration is also essential, as it shows that both parties are committed to the agreement.

Here are the key elements of an implied-in-fact contract:

  • Offer and its acceptance;
  • Mutual agreement;
  • Consideration.

In contrast, an implied-in-law contract, also known as a quasi-contract, can be formed even if neither party intended to create it. This type of contract is defined by a set of circumstances rather than by the behavior of the parties involved.

Express contracts are generally easier to enforce because the terms are well-defined and agreed upon by the parties. Written contracts serve as strong evidence in legal proceedings.

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Implied contracts, on the other hand, may face challenges in terms of enforceability. Determining the precise nature of the agreement can be more complex because the terms are not explicitly stated.

Courts typically consider the conduct, actions, and intentions to determine the terms of the implied contract. This can make it difficult to impose the terms of an implied contractual agreement.

Implied contracts may be subject to interpretation, and their enforcement may depend on specific facts and circumstances. This can lead to challenges in enforcing the agreement.

Contract Legality

Implied contracts can be legally binding, but only if certain conditions are present, such as a clear indication of a mutual agreement and a legal obligation inferred from the parties' actions or circumstances.

Express contracts are generally easier to enforce because the terms are well-defined and agreed upon by the parties.

For an implied contract to hold legal weight, it's essential that the parties involved had an unspoken understanding that a contract existed between them. This aspect is crucial in situations where one party would face unjust enrichment without legal enforcement of the agreement.

Written contracts serve as strong evidence in legal proceedings, making express contracts more enforceable.

Caroline Cruickshank

Senior Writer

Caroline Cruickshank is a skilled writer with a diverse portfolio of articles across various categories. Her expertise spans topics such as living individuals, business leaders, and notable figures in the venture capital industry. With a keen eye for detail and a passion for storytelling, Caroline crafts engaging and informative content that captivates her readers.

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