Are you familiar with the concept of an express contract?
No, it’s not a contract that arrives at lightning speed (although that would be cool, wouldn’t it?).
An express contract is a type of agreement that is explicitly stated, either verbally or in writing, in simple and unambiguous terms.
You must be thinking: “But how is this different from any other contract?”
Look at it this way: If a regular contract is like a thick household manual, an express contract is more like a straightforward instruction booklet.
There’s no need to flip back and forth between pages or have to guess what the other party meant — everything is spelled out clearly and explicitly in the least amount of text possible.
But with great clarity comes great responsibility, so it’s crucial to approach express contracts carefully — and to know what you’re doing.
In this article, we’ll dive into the nitty-gritty of express contracts: What they are, how they differ from other types of contracts, and most importantly, how to protect your interests when entering into one.
(Hint: A contract management solution like PandaDoc makes everything easier without slowing down your contract workflow.)
So, let’s get down to business.
Key takeaways
- Express contracts are written or verbal contractual agreements where all terms and conditions are stated in clear, unambiguous language, contrary to the highly technical language of many standard contracts.
- The purpose of express contracts is to simplify the negotiation process and make it easier and faster for both parties to close a deal with minimal friction.
- The best way to protect your interests when entering express contracts without slowing down the process is to use a contract management solution like PandaDoc, which enables you to have on-brand, customized templates that you can adapt to each situation and send out in minutes.
What is an express contract?
An express contract is a type of agreement where all the terms and conditions are clearly stated, either verbally or in writing.
The key difference between express contracts and other types of contracts is that express contracts are very specific, simple, and straightforward — and therefore don’t leave much room for interpretation.
“Standard” contracts and contractual agreements are often written in a way that’s very complex and technical, with long, convoluted sentences, which might make them difficult to understand for people who have no legal background.
Contrary to that, express contracts are very straight-to-the-point, uncomplicated, and lay everything out in plain English (rather than in legalese).
They can also be verbal agreements or take the form of a simple email exchange.
In short, express contracts are crystal clear agreements, which don’t always have the “shape” of a classical contract.
The main purpose of express contracts is to enable both sides to move quickly when making agreements, i.e. to not slow down their work together by having to draft and negotiate a long and detailed contract.
One of the best ways to mitigate business risk without slowing down the process is to use a dedicated contract management solution like PandaDoc, which offers you a large library of ready-made templates and enables you to create your own custom (and fully customizable) document drafts.
Do express contracts need to be in writing?
While express contracts don’t necessarily need to be in writing, it’s always a good idea, especially when navigating B2B deals.
While verbal contracts are indeed legally binding if they meet the standard criteria that applies to all contracts (more on that later), we’d always advise you to put the contract terms in writing and not rely on your memory.
The best way to keep things simple and move fast (without relying on verbal agreements) is to have a set of short, customizable, on-brand contracts, which you can immediately adapt to the situation and send to the other party — and which the other party can sign instantly, on any device.
The good news? You don’t need to do the heavy lifting yourself; the solution already exists.
PandaDoc enables you to build your own set of agreements that are consistent for your entire organization and send them out in minutes whenever negotiating a deal.
Examples of an express contract
Express contracts can take the shape of “standard” contracts, i.e. a document that lays out specific terms and conditions and that is signed by both parties, or they might sometimes come in the form of simple spoken or email agreements.
Let’s look at a few examples:
A service agreement
Service agreements outline the scope of services to be provided, the payment terms, and other important details.
For example, if a company needs a new webpage, they might decide to contact a web design agency to ask about prices and capacity.
When the agency makes an offer and the company agrees to it, they’ve entered into an express contract.
Here’s a service agreement template from PandaDoc you can use straight away.
A purchase agreement
Purchase agreements are express contracts for the purchase of products.
Let’s say you need to buy 10 laptops for your new employees who’ll be working from home.
You get in touch with your supplier and place an order, which a) you agree to pay for, and b) they agree to fulfill.
We have a few purchase agreement templates you can use for free.
An employment contract
When you hire a new employee, you both sign a contract that outlines the terms of their employment, both sides’ responsibilities, payment terms, and more.
Employment contracts are usually fairly straightforward but they need to be compliant with local labor laws. We have free employment contract templates in our library, too.
A lease agreement
These are contracts between a landlord and a tenant that outline the terms and conditions of the lease, including the rent amount, payment due dates, and other important details.
Need one? We’ve got you covered: Grab the right rental lease agreement template from our template library.
Express contracts vs. implied contracts: what’s the difference?
In short, express contracts are clear-cut and unambiguous, whereas implied contracts are based on behavior and can be more open to interpretation. Let’s look at the details:
Explicit vs. implied terms
An express contract is one where both sides explicitly state and agree to specific terms, either verbally or in writing.
An implied contract is one where the terms are not explicitly stated, but can be inferred based on the actions and behaviors of the parties involved — and both parties share a mutual understanding of what is expected.
Statement of intentions
With express contracts, both parties agree to the terms of the contract and make their intentions explicitly clear.
Contrary to that, two parties can form an implied contract through an established pattern of behavior, like consistently paying for a service.
Types of transactions
Express contracts are often used for important transactions, like real estate purchases or employment agreements.
Implied contracts are often used when you make a simple purchase (or series of purchases) or a short engagement.
What are the key elements of an express contract?
As for any contract, express contracts need to fulfill certain requirements to be valid — and namely, to contain a number of key contract elements:
- Offer: One side makes an offer to the other side.
- Acceptance: The other side accepts the offer.
- Consideration: Consideration refers to the exchange of something of value between the two parties, usually money for a product or service.
- The parties’ capacity: The two parties need to have the capacity to enter into a contract and fully understand the agreement and its obligations.
- Intention to enter into a contract: And finally, both parties have to show a clear intention to enter into a contract.
Additionally, any contract needs to be legal, i.e. you cannot enter into a contract if any part of it is related to illegal activities.
How to create and manage express contracts efficiently: A step-by-step guide
Although express contracts can also be verbal, it’s always a good idea to have them in writing, which is the process we’ll stick to in this section.
This protects the interests of both parties, because it helps avoid potential future disputes with arguments based around claims of “This is not what I said” or “We never agreed to these terms.”
1. Make an offer
The first step of any express contract is to make an offer, where you outline the product or service you’re offering, plus the pricing.
You can make an offer during a call, for example, but it’s always best to follow up with a written version of it (we’ll get to this in Step 3).
2. Identify the key terms for both parties
Next, identify all the key terms for both sides, on which they’d be willing to agree. Those can be:
- The product or service offered
- Pricing and payment terms
- Timeline
- Performance obligations
If the first point of contact was a sales call, it’s a good idea to identify those terms during the call.
3. Put the terms in writing
Next, you need to put everything in writing to make sure it’s all spelled out and 100% unambiguous.
There are a few rules you need to follow to create a contract successfully, but it’s much easier and faster to do it if you have a template at hand — and the right business proposal software.
PandaDoc enables you to make sleek, professional-looking proposals and express contracts in no time, thanks to its drag-and-drop editor, customizable formatting, and template library of 750+ documents.
4. Ensure both parties agree to the terms
Have both parties read the contract and make sure you both agree on the terms and on what each side expects from the other one.
Negotiate and adjust if necessary.
Again, with PandaDoc that’s super simple to do: You can edit your contracts in real time and have as many eyeballs on each contract as you need — simultaneously.
5. Sign the contract and store it securely
The last step is to sign the express contract and store it securely for future reference.
If you’re using PandaDoc, you can simply send a link to the other party and they’ll be able to eSign the contract on any device; then, it’ll be stored in your document repository, where you can find it quickly by searching for keywords or names.
Express contracts don’t have to be risky if you manage them the right way
One concern that companies have with long, detailed contracts (what is considered a “standard contract”) is that they might slow down the sales process by adding unnecessary friction to it, which might make the other party back out before signing.
Express contracts are an easy solution to that problem, because they enable you to get the contract terms spelled out in clear and unambiguous language and move on quickly to closing the deal.
When drafting express contracts, however, you need to be extra careful to not leave out important details or any of the elements that make a contract valid.
One of the best ways to do this is to use PandaDoc, the best all-in-one contract management platform on the market.
With it, you can create a customized contract library for all your use cases and, whenever needed, simply pull out the right template, add the specifics, and send it to the other party to sign.
Sign up for a free 14-day trial to see for yourself how much easier contract management can be.
Frequently asked questions
-
An express contract in real estate is a written or spoken agreement between two or more parties involved in a real-estate deal that clearly spells out the terms and conditions of the transaction.
It can be a purchase agreement between a buyer and a seller or a lease agreement between a landlord and a tenant. The parties agree to the terms of the contract, which are explicitly stated in it.
-
One requirement of an express contract is that it contains a clear and unambiguous offer, acceptance, and consideration. Additionally, both parties must have the legal capacity to enter a contract and the intention to do so. These stipulations apply to both written and verbal express contracts.
-
Yes, an express contract is legally binding if it contains all the elements of a contract, e.g., an offer, acceptance, consideration, legal capacity, and intention. As long as the contract clearly outlines the terms and both parties agree to them, the contract is enforceable by law.
Disclaimer
PandDoc is not a law firm, or a substitute for an attorney or law firm. This page is not intended to and does not provide legal advice. Should you have legal questions on the validity of e-signatures or digital signatures and the enforceability thereof, please consult with an attorney or law firm. Use of PandaDocs services are governed by our Terms of Use and Privacy Policy.
