Certified Residential Appraiser Practice Exam

Which of the following statements is true regarding express contracts?

1. They can only be executed in written form

2. They require a third-party witness to be valid

3. They can be oral or written

4. They must be filed with a local authority

The correct answer is: They can be oral or written

Express contracts are agreements where the terms are clearly stated, either verbally or in writing. The crux of an express contract is that both parties understand and agree to the specific terms that have been articulated. Therefore, the allowance of express contracts to be either oral or written means that as long as the terms are agreed upon by both parties, they can be effectively enforced regardless of the medium used to articulate those terms. This flexibility is what distinguishes express contracts from other types of contracts, such as implied contracts, which arise from the conduct of the parties rather than from explicit agreement. While some contracts, especially those regarding real estate or other significant transactions, often need to be in writing to be enforceable under the Statute of Frauds, express contracts themselves do not inherently require a specific form. Hence, while some alternatives might suggest restrictions like the necessity for a written format or third-party witnesses, these are not universally applicable to all express contracts. The fundamental nature of express contracts allows for both oral and written forms, making such contracts versatile in practice.