Express and Implied Contract: Understanding the Difference
When entering into a business agreement, it’s essential to understand the terms of the contract. There are two types of contracts: express and implied. Whether you’re a business owner or a freelancer looking to sign a contract, it’s crucial to distinguish between the two.
An express contract is a contract in which the parties involved explicitly state the terms and conditions of the agreement. Such agreements can be written or verbal. For instance, when a customer purchases a product or service, they sign an express contract. The written agreement outlines the terms of service, payment amounts, due dates, and any other conditions agreed upon.
The express contract is legally binding, and it’s essential to ensure that all parties understand the terms before signing. Therefore, both parties must read and agree to the terms of the agreement before signing. In the absence of a written agreement, an express contract can still be lawful, provided there’s mutual consent of the terms.
An implied contract, on the other hand, is a legally binding contract in which the terms are not explicitly stated or written. It arises when there’s no express agreement, but there is conduct that suggests an agreement exists. Implied contracts come in two forms: implied-in-fact and implied-at-law.
Implied-in-fact contracts are typically based on the reasonable interpretation of the parties` interactions, words, or conduct. The parties` actions imply that they have a mutual understanding of the terms, even though not explicitly stated. For example, if a freelancer has been working for a client without a written contract, the client’s payment of the freelancer’s invoices implies an agreement between the two parties.
Implied at law contracts are also known as quasi-contracts, where the court imposes an obligation on one party to compensate the other for a benefit received. This type of contract arises when there is no agreement between the parties, yet there was a clear expectation of compensation for goods or services. For instance, if a plumber fixes a burst pipe at a customer`s house, and the customer pays the plumber, an implied-at-law contract exists.
It’s essential to understand the differences between express and implied contracts before signing any agreements. Express contracts contain clear and concise terms that both parties agree to, while implied contracts are based on the conduct of the parties and can be less clear.
In conclusion, whether you’re creating a new contract, modifying an existing one, or entering into an agreement with a client or vendor, it’s advisable to seek legal advice. A legal professional can help you identify the type of contract you’re entering into and ensure that the terms are favorable to all parties involved.