What is the key distinction between an express contract and an implied contract?

The key distinction between an express contract and an implied contract lies in how the terms of each type of contract are established. An express contract is one where the terms are explicitly stated, either verbally or in writing, leaving no ambiguity about the parties' intentions. For example, if two parties agree on the specifics of a sale in a signed written document, that is an express contract.

In contrast, an implied contract is not formally written or spoken but is instead formed by the conduct and circumstances surrounding the parties’ actions. This often happens in everyday situations where, based on the behavior or situation, it is reasonable for one party to expect compensation for services rendered, even if there was no explicit agreement made.

Understanding this distinction is crucial in contract law because it affects how contracts are enforced and interpreted in legal settings. The factual scenario that leads to the establishment of implied contracts can sometimes complicate matters if there is a dispute regarding what was agreed upon, since it relies heavily on inferred intentions rather than clear terms laid out in communication.