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:
1. Offer
2. Acceptance
3. Consideration
4. Object
5. Capacity
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:
1. There is a clear offer
2. There is a clear acceptance of the offer
3. 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.
Express offer
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.
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.
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.
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.