Express Contract

An express contract is a legally binding agreement, the terms of which are all clearly stated either orally or in writing. For an express contract to come together, there must be an offer made by one of the parties, and acceptance of that offer by the other party. To determine if an express contract has been properly formed, courts will analyze the communications made between the parties during the formation of the contract. To explore this concept, consider the following express contract definition.

Definition of Express Contract

Noun

  1. A legally binding agreement between two parties wherein the terms are clearly defined either orally or in writing.

Origin

1275-1325       Middle English

What is an Express Contract

An express contract is a contract with clearly stated terms. This differs from an implied contract, which is a contract that is believed to exist based on the behaviors of those involved. The terms that are explicitly defined within an express contract include the quantity of goods delivered (or specific services rendered), as well as the time period during which the transaction is expected to take place.

The acceptance of an express contract must be unequivocal, which means that it must conform exactly to the terms offered in the contract. If a party agrees to the contract but looks to amend its terms and conditions in some way, then that party is not unequivocally agreeing to the contract, and is instead looking to make a counter-offer. Once a counter-offer has been made, then the contract no longer qualifies as an express contract.

Further, for an express contract to be considered valid in a court of law, the parties must either exchange something or value, or suffer a loss of some kind. This binds them to the terms of the contract by expecting that they will hold up their end of the bargain to either earn their reward or compensate for their loss. Typically, this element of the contract is satisfied by the parties agreeing to pay money in exchange for goods delivered or services rendered by the other party.

For example, an express contract is formed when one party offers to install new carpet in the other party’s house for the payment of $1,000. Here, the terms are clear. One party is receiving an installation of carpet, and the other party is paying a clear amount for that service. This agreement then becomes an example of an express contract that can be validated in a court of law.

Express Contracts and Implied Contracts

A contract can fit into one of two categories: express contracts and implied contracts. An express contract illustrates the promise that was made between the parties in clear and certain terms. An implied contract, on the other hand, is one that leads the parties to believe that a contract exists based on the behaviors of those involved.

A contract to purchase a home is a good example of express contract use. This is because there are specific elements to the contract that are clearly expressed and, if agreeable, are accepted unequivocally by the purchaser. The elements of an express contract include the offer, the acceptance of that offer, and a mutual agreement between the parties as to the terms of the contract. However, not every contract is this cut and dry. Some contracts simply happen due to circumstance, and those contracts are referred to as implied contracts.

An implied contract, however, does not involve a written contract. However, the circumstances of a situation lead to either one person benefitting from his actions, or to the understanding among the parties that a contract exists. Implied contracts can be further broken down into contracts that were either implied in fact or implied in law.

Implied in Fact Contracts

An implied in fact contract is a contract that exists when a person arrives at an establishment and expects to receive a service. For instance, when a person goes to the local deli, the deli expects that the customer will order and then pay for his sandwich. The customer also expects that, when he orders a sandwich and offers to pay for it, he will receive exactly what he has ordered. This common understanding between the parties based on their conduct in this situation serves as an implied in fact contract.

Implied in Law Contracts

Implied in law contracts are not technically contracts at all. These are situations wherein a court can decide if a contract did, in fact, exist because of the behavior (or lack of behavior) of those involved. The purpose of involving a court is to determine whether the parties can collect restitution for services rendered.

Consider the following example. A passenger on an airplane begins to choke mid-flight. Luckily, there is a doctor on board and he performs the Heimlich maneuver, saving his fellow passenger. The doctor then hands the passenger a bill for services rendered. The passenger refuses to pay the bill, his reason being because he did not ask the doctor for his help.

The passenger would not be successful if the doctor then brought a lawsuit against him. The courts would examine whether the passenger was unjustly enriched in accepting the doctor’s services. Unjust enrichment occurs when one party unfairly receives something of value from the other party. In this case, the passenger received free medical treatment that saved his life. A judge in this case would likely require the passenger to pay restitution to the doctor.

Express Contract Example Involving a Celebrity Divorce

Michelle Marvin claimed that, in October of 1964, she and actor Lee Marvin “entered into an oral agreement” that while the couple lived together, they would pool their earnings and would share equally in any of the property they accumulated. Michelle also claimed that she and Lee had agreed that they would represent to the general public that they were husband and wife, despite not being married. Michelle would also render wifely services to Lee in acting as his companion, homemaker, cook, and housekeeper.

Shortly after entering into this express contract with Lee, Michelle gave up her career as a successful entertainer in order to devote herself full-time to Lee. In return, Lee had agreed to provide for Michelle’s financial needs for the rest of her life. Michelle alleged that she fulfilled her end of the agreement during the period in which she lived with Lee, which lasted from October of 1964 until May of 1970.

During this period, the couple had amassed a small fortune, including motion picture rights valued at over $1 million. In May of 1970, however, Michelle claimed that Lee forced her to leave his home. He continued to provide her with financial support until November of 1971, but thereafter he refused. Michelle then filed suit, asking the court to determine her rights in consideration of the express contract and her separate property. She also asked the court to establish a constructive trust for half of the total property that she had acquired over the course of her relationship with Lee.

After a hearing, the trial court granted Lee’s motion to dismiss. Michelle then moved to have the judgment set aside and to amend her complaint to allege that she and Lee had reaffirmed their express agreement after Lee’s divorce from his first wife was finalized. The trial court, however, denied Michelle’s motion, and she appealed that judgment.

Lee’s main argument in opposition to Michelle’s appeal was that the alleged contract was so closely related to the “immoral” character of his “illicit” relationship with Michelle (living together as an unmarried couple) that to enforce the contract would “violate public policy.” The Supreme Court of California disagreed, stating that contracts between nonmarital partners are only unenforceable if they rely “upon the immoral and illicit consideration of meretricious sexual services.” The Court further held that:

“The fact that a man and woman live together without marriage, and engage in a sexual relationship, does not in itself invalidate agreements between them relating to their earnings, property, or expenses. Neither is such an agreement invalid merely because the parties may have contemplated the creation or continuation of a nonmarital relationship when they entered into it.”

Lee secondly relied upon the suggestion of the trial court that the express contract violated public policy because it infringed upon the property rights of Betty Marvin, Lee’s lawful wife at the time the contract was made. Lee noted that his earnings were still community property to be shared with Betty, despite living apart from her during the time period in which the earnings accumulated. However, the Court once again disagreed, noting that enforcing the contract between Michelle and Lee against property awarded to Lee by the divorce decree would not impact Betty in any way.

For his third argument, Lee contended that enforcing the oral agreement between Michelle and himself was barred by California’s Civil Code section 5134, which provided that “all contracts for marriage settlements must be in writing.” However, once again the Court disagreed, saying that the contract being disputed here did not fall within the definition of a marriage settlement.

The Court also struck down Lee’s fourth and final argument, which contended that the contract could not be enforced because an agreement to pool together resources could not be upheld between nonmarital partners. Ultimately, the Court ruled that the trial court erred in granting Lee’s motion for dismissal, and that the terms of the couple’s express contract were not unlawful, and instead served as “a suitable basis upon which the trial court can render declaratory relief.”

Related Legal Terms and Issues

  • Declaratory Relief – A judgement made by a court determining certain rights of a party without ordering any action to be taken, or ordering any damages.
  • Restitution – Compensation for an injury or loss.

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