Certified Residential Appraiser Practice Exam

What defines an express contract?

1. An agreement that is always verbal

2. An agreement whose existence and terms are stated in words or writings

3. A contract that cannot be enforced

4. A contract implied by the actions of the parties

The correct answer is: An agreement whose existence and terms are stated in words or writings

An express contract is characterized by the existence and terms of the agreement being clearly articulated, either verbally or in written form. This clarity is fundamental as it distinguishes express contracts from implied contracts, where the terms are inferred from the actions of the parties rather than explicitly stated. By having defined terms, both parties involved in an express contract have a mutual understanding of their obligations and rights, reducing the potential for disputes. This explicit communication can include details such as prices, goods or services provided, timelines, and other conditions that ground the contractual relationship. The other choices present definitions that either inaccurately depict the nature of an express contract or refer to different types of agreements. For instance, a verbal agreement alone is not sufficient to define an express contract, as it can also be written. Additionally, contracts that cannot be enforced or those that are suggested by the actions of the parties fall outside the scope of express contracts. Thus, identifying an express contract relies on clear and direct communication between the involved parties regarding their agreement.