Explicit contract

Definition

An explicit contract is a clearly stated agreement between parties that outlines the terms, obligations, and conditions of a deal, typically documented in written form. This type of contract is enforceable by law and is characterized by the direct communication of intentions and terms between the involved parties, ensuring that all aspects of the agreement are understood and agreed upon.

5 Must Know Facts For Your Next Test

1. Explicit contracts can be oral or written, but written contracts are more common due to their clarity and ease of enforcement.
2. These contracts often include specific clauses detailing terms such as payment schedules, deliverables, and deadlines.
3. Explicit contracts are crucial in business dealings as they provide legal protection and clarity for all parties involved.
4. In the context of social contract theory, explicit contracts can serve as a metaphor for the agreements individuals make within society regarding rights and responsibilities.
5. Failure to adhere to an explicit contract can lead to disputes and may require mediation or legal action to resolve.

Review Questions

• How does an explicit contract differ from an implied contract in terms of enforceability and communication between parties?
  • An explicit contract is characterized by clearly stated terms and direct communication between parties, making it legally enforceable. In contrast, an implied contract arises from actions or circumstances rather than written or spoken words, which can lead to ambiguity regarding enforceability. The explicit nature of an explicit contract ensures that all parties are fully aware of their obligations, while implied contracts may rely on the interpretation of behavior to establish agreement.
• What role do explicit contracts play in protecting the interests of parties involved in business transactions?
  • Explicit contracts protect the interests of parties by clearly outlining the rights and responsibilities of each party involved in a transaction. By documenting specific terms such as payment amounts, timelines, and deliverables, these contracts help prevent misunderstandings and disputes. If a party fails to meet their obligations as outlined in an explicit contract, the other party has legal grounds to pursue a breach of contract claim, thus ensuring accountability.
• Evaluate how the concept of explicit contracts relates to social contract theory and its implications for ethical behavior in society.
  • The concept of explicit contracts can be closely related to social contract theory, where individuals agree to certain rules and norms that govern their interactions within a society. In this context, explicit contracts symbolize mutual consent to abide by specific ethical standards and responsibilities. When individuals enter into these agreements, they create a framework that fosters trust and cooperation, reinforcing ethical behavior within society. The implications are significant; by adhering to explicit contracts at both personal and societal levels, individuals contribute to a stable and just environment that aligns with the principles of social responsibility.

Related terms

implied contract: An implied contract is an agreement that is not written or spoken but is inferred from actions, conduct, or circumstances of the parties involved.

breach of contract: A breach of contract occurs when one party fails to fulfill their obligations as outlined in the contract, resulting in potential legal consequences.

consideration: Consideration refers to something of value that is exchanged between parties in a contract, which is necessary for a legally binding agreement.