Express terms of a contract refer to the kind of terms that are specifically stated in the contract either orally or in writing and set out the definitive agreement between the parties.
Terms of a contract will show the duties and obligations of the parties in the contract. This could mean a party has to do something or do something in a specific manner. Breach of these obligations will have specific consequences which may be enforced through legal action or litigation.
As part of managing contractual risks, it is therefore important to understand the terms of a contract.
How express terms of a contract differ from implied terms
As pointed out express terms of a contract are the terms that have been ‘expressly’ stated either in writing or verbally. By contrast implied terms are contractual terms that exist but are not written within the contractual documentation. While the parties may not have spoken of implied terms, these provisions or conditions are going to be assumed by the law as forming part of the contract.
One of the ways terms of a contract can be implied is through custom and practice. If it is normal in a given area or industry, or simply between the two parties who regularly contract with each other, for things to happen in a certain way, a requirement for that to be so might be implied into the contract.
This would normally only happen if the contract itself was silent on the matter.
In a situation where there is a conflict between an express term of a contract and an implied term, express term will generally win.
To avoid making mistakes in a contract it is therefore important to understand the type of terms you are dealing with.
Why do you need express terms in a contract?
Generally express terms will be used to indicate as clearly as possible what that contractual agreement is.
These terms should do the following.
- Set out the obligations of the purchaser
- Set out the obligations of the supplier
- Set out the rights of the purchaser if the supplier defaults
- Set out the rights of the supplier if the purchaser defaults
- State how the parties will deal with circumstances beyond the control of either party
- Where possible, either confirm or override any potentially implied terms
Remember:
An express term in a contract will normally override an implied term, but there is one circumstance where it might not be permitted to do so, and that is where the term is implied by statute.