Which type of contract is formed by a verbal agreement?

A verbal agreement results in an express contract, as this type of contract is formed when the terms of the agreement are explicitly stated—either verbally or in writing. The key characteristic of an express contract is the clear communication of the parties' intentions and the agreement on specific terms.

In the case of a verbal agreement, although it's not documented in writing, both parties understand and agree to the terms discussed. This distinguishes express contracts from implied contracts, where the terms are not stated directly but inferred through actions or circumstances.

Understanding express contracts is fundamental in commercial contracting as it establishes clear expectations and obligations between parties, which is important for enforcement and interpretation in a legal context. The specific mention of a verbal agreement reinforces that both parties have mutually consented to the terms directly, which characterizes an express contract.