Express vs. Implied Contracts: What’s the Difference and Why It Matters
Express vs. Implied Contracts: What’s the Difference and Why It Matters
Publish date: July 31, 2025
🕒 Reading time: 5 minutes
❓Express vs. Implied Contracts: What’s the Difference?
Understanding how contracts are formed is crucial to managing business relationships effectively. Two fundamental types are express contracts and implied contracts. While both are legally enforceable, they differ in how the agreement is communicated and established between the parties. Here's what you need to know.
❓What is an express contract?
An express contract is a formal agreement where all terms are clearly stated, either in writing or verbally. If you and another party explicitly outline the responsibilities, deadlines, payments, or deliverables, you’re entering into an express contract. These contracts leave little room for confusion because each party understands its obligations from the outset. Written agreements are generally preferred for legal clarity, especially in complex transactions or long-term business arrangements.
❓What is an implied contract?
An implied contract is formed based on the behavior or circumstances of the parties, even if nothing is explicitly said. For example, if you visit a hair salon and receive a haircut, it’s implied you’ll pay for the service. The agreement exists through conduct rather than spoken or written words. While implied contracts are enforceable, they can be harder to prove, especially if disputes arise about expectations or compensation.
❓How are implied contracts created?
There are two main types of implied contracts: implied-in-fact and implied-in-law (also known as quasi-contracts). Implied-in-fact contracts arise from actions that suggest an agreement was intended, like consistently accepting and paying for services without signing a formal contract. Implied-in-law contracts are created by courts to prevent unjust enrichment, even when no mutual agreement existed. These are used to enforce fairness, not to reflect the actual intent of the parties.
❓Express vs. Implied Contracts: What’s the Difference?
Understanding how contracts are formed is crucial to managing business relationships effectively. Two fundamental types are express contracts and implied contracts. While both are legally enforceable, they differ in how the agreement is communicated and established between the parties. Here's what you need to know.
❓What is an express contract?
An express contract is a formal agreement where all terms are clearly stated, either in writing or verbally. If you and another party explicitly outline the responsibilities, deadlines, payments, or deliverables, you’re entering into an express contract. These contracts leave little room for confusion because each party understands its obligations from the outset. Written agreements are generally preferred for legal clarity, especially in complex transactions or long-term business arrangements.
❓What is an implied contract?
An implied contract is formed based on the behavior or circumstances of the parties, even if nothing is explicitly said. For example, if you visit a hair salon and receive a haircut, it’s implied you’ll pay for the service. The agreement exists through conduct rather than spoken or written words. While implied contracts are enforceable, they can be harder to prove, especially if disputes arise about expectations or compensation.
❓How are implied contracts created?
There are two main types of implied contracts: implied-in-fact and implied-in-law (also known as quasi-contracts). Implied-in-fact contracts arise from actions that suggest an agreement was intended, like consistently accepting and paying for services without signing a formal contract. Implied-in-law contracts are created by courts to prevent unjust enrichment, even when no mutual agreement existed. These are used to enforce fairness, not to reflect the actual intent of the parties.
❓When should you use an express contract over an implied one?
If the agreement involves complex terms, long timelines, large sums of money, or high legal risk, you should opt for an express contract. It protects your interests by documenting each party’s obligations and provides a clear reference point if disputes arise. Implied contracts might work for everyday transactions or informal services, but they lack the clarity and security of written terms. Whenever possible, formalize your agreements in writing to avoid misunderstandings.
❓Are implied contracts legally enforceable?
Yes, implied contracts can be legally binding, but proving their existence can be challenging. Courts will look at the conduct of the parties, the nature of the relationship, and whether one side reasonably relied on the other’s behavior. If you find yourself relying on a handshake deal or a routine arrangement, keep records such as invoices, emails, or payment receipts to support your position if legal questions come up.
❓What are the risks of relying on implied contracts?
The main risk with implied contracts is ambiguity. Without clearly defined terms, it’s easy for either party to misinterpret the scope, pricing, or expectations. This can lead to disputes that are difficult to resolve. For your protection, avoid relying solely on implied agreements in business settings, especially when dealing with new clients, large projects, or legally sensitive work. Express contracts reduce these risks by providing a documented understanding from the start.
❓Can a contract be both express and implied?
Yes, some agreements can contain both express and implied elements. For example, your written contract may outline core terms like pricing and scope, while your ongoing actions, such as providing extra support or adjusting timelines, might create additional implied obligations. These hybrid arrangements can complicate enforcement, so it’s best to clarify and document any changes to avoid misalignment. Keeping communication transparent and written helps prevent confusion as the relationship evolves.
❓How can you make sure your contract is enforceable?
To ensure your contract, whether express or implied, is enforceable, you need to show mutual agreement, offer and acceptance, and consideration (something of value exchanged). For express contracts, putting everything in writing gives you the strongest legal footing. If you're working under an informal or implied agreement, document everything you can, including email threads, service logs, and payment confirmations. That way, you’ll have a solid record if you ever need to prove the terms in court.
❓When should you use an express contract over an implied one?
If the agreement involves complex terms, long timelines, large sums of money, or high legal risk, you should opt for an express contract. It protects your interests by documenting each party’s obligations and provides a clear reference point if disputes arise. Implied contracts might work for everyday transactions or informal services, but they lack the clarity and security of written terms. Whenever possible, formalize your agreements in writing to avoid misunderstandings.
❓Are implied contracts legally enforceable?
Yes, implied contracts can be legally binding, but proving their existence can be challenging. Courts will look at the conduct of the parties, the nature of the relationship, and whether one side reasonably relied on the other’s behavior. If you find yourself relying on a handshake deal or a routine arrangement, keep records such as invoices, emails, or payment receipts to support your position if legal questions come up.
❓What are the risks of relying on implied contracts?
The main risk with implied contracts is ambiguity. Without clearly defined terms, it’s easy for either party to misinterpret the scope, pricing, or expectations. This can lead to disputes that are difficult to resolve. For your protection, avoid relying solely on implied agreements in business settings, especially when dealing with new clients, large projects, or legally sensitive work. Express contracts reduce these risks by providing a documented understanding from the start.
❓Can a contract be both express and implied?
Yes, some agreements can contain both express and implied elements. For example, your written contract may outline core terms like pricing and scope, while your ongoing actions, such as providing extra support or adjusting timelines, might create additional implied obligations. These hybrid arrangements can complicate enforcement, so it’s best to clarify and document any changes to avoid misalignment. Keeping communication transparent and written helps prevent confusion as the relationship evolves.
❓How can you make sure your contract is enforceable?
To ensure your contract, whether express or implied, is enforceable, you need to show mutual agreement, offer and acceptance, and consideration (something of value exchanged). For express contracts, putting everything in writing gives you the strongest legal footing. If you're working under an informal or implied agreement, document everything you can, including email threads, service logs, and payment confirmations. That way, you’ll have a solid record if you ever need to prove the terms in court.