Implied Contract
A legally-binding obligation that arises from the conduct of one or more parties or circumstances of an agreement.
What Is an Implied Contract?
An implied contract is a legally binding obligation that arises from the conduct of one or more parties or circumstances of an agreement. It has the same legal effect as an express contract.
An express contract is any verbal or written agreement between two parties intended to be legally enforceable and that both parties agree to carry out specific obligations.
Most contracts involve a benefit exchange, where one party receives products or services, and the other party is compensated for the goods or services delivered.
Contrarily, this contract is assumed to exist and requires neither a written nor an oral confirmation.
Compared to express more common contracts, implied contracts are comparatively uncommon. Express contracts are often formal, written agreements. However, they can also take the form of oral contracts.
Understanding Implied Contract
A prior express agreement between the parties is frequently the basis for an implied contract.
Even if you may not even speak when you place an order for food in a restaurant, you still consent to get products or services in exchange for money, even though you did not explicitly sign a contract.
You can't enjoy the food and then decline to pay because you didn't sign a contract.
A judge would find the presence of an "implied contract" between you and the restaurant and order you to pay up to prevent someone from receiving something for nothing, or, as it is known in legal terms, unjust enrichment.
In some cases, it is more challenging to enforce an implied contract due to a lack of paperwork.
No one should get unfair benefits at the expense of another. According to implicit contract principles, fair play can be achieved without a written or verbal agreement.
One sort of implied contract is, for instance, the implied warranty. A product must be able to perform its role before being acquired. For example, a new air conditioner must produce cool air; otherwise, the seller or the manufacturer has broken the conditions of an implicit contract.
Since obtaining a signed document is not always sufficient to establish the validity of a claim, it can be challenging to enforce such contracts. Additionally, these contracts are subject to restrictions in some jurisdictions.
For instance, in some courts, a contract for a real estate transaction must be supported by a written agreement.
Implied-in-Fact vs. Implied-in-Law Contracts
The fundamental fairness principle, which holds that no party should benefit from another without the contributing party receiving just compensation, forms the basis for the legal enforcement of implicit contracts.
Implied-in-fact and implied-in-law contracts are the two types.
An implied-in-fact contract is formed when the circumstances and actions of the parties involved imply that they each have a tacit understanding that they have made an agreement that contains duties on both sides.
Contracts that are implied-in-fact share the same qualities as express contracts. A form of consideration, provided, an offer made by one party and accepted by the other, and both parties desire to enter into a contract.
The distinction is that, as opposed to being stated verbally or in writing, the terms of an implied-in-fact contract are deduced from the parties' conduct.
A person must demonstrate that the circumstances suggested that both parties intended for there to be an agreement to establish the existence of an implied-in-fact contract.
For instance, a teenager who offers to walk a neighbor's dog since she has trouble walking her dog due to a damaged ankle is given two movie tickets in exchange.
The neighbor failed to present the movie tickets on the most recent occasion. When he asked for his money, the owner claimed she never planned to pay him for each walk and that she felt you were being nice.
The teenager has a case in the neighbor's regular production of movie tickets in exchange for dog-walking services, resulting in the creation of an implied contract. It makes sense to assume that.
The court would interpret the owner and the teen's acts as an agreement to exchange dog walking services for consideration. Because he walked the dog owner's dog and she paid him for those services the first three times, they had already established an implied-in-fact contract.
The implied-in-law contract, another unwritten agreement, is also a quasi-contract. Neither party intended to enter into a binding agreement.
Such agreements typically rest more on a collection of facts than on the actions of the concerned parties.
When one party may otherwise unfairly benefit at the expense of another, courts will recognize an implied-in-law contract.
Such contracts often have the critical feature of being enforceable even when neither party intends to enter into an agreement.
For instance, a doctor named Alex might pass a neighbor's house while strolling and notice the neighbor suddenly pass out on his front porch.
Alex responds quickly to his neighbor's help, discovers that the neighbor has had a stroke, and treats him medically until help arrives.
Later, Alex sends the neighbor a bill for his medical services.
Even though the neighbor neither requested the services nor, at the time, had any intention of paying Alex, a court will typically recognize an implied-in-law contract between Alex and his neighbor.
This is because the fundamental principle of fairness decrees that Alex should receive just compensation for his professional services.
How are Implied Contracts Enforced?
When one party fails to fulfill their obligations under an implied contract, the other party may seek to collect the money owed by using the same procedures as they would under a written agreement.
They can resort to litigation, binding arbitration, or mediating the dispute.
A written contract outlines each party's obligations to carry out the terms of the agreement.
They'll have to prove the conditions both parties impliedly consented to, based on their actions if there is an implied-in-fact contract.
In the case of an implied-in-law contract, they will also need to demonstrate how one party will unfairly benefit from the other's labor or the delivery of products.
The term breached will either be:
- a condition
- a warranty, or
- an innominate or "intermediate" term
A party who breaches a contract is subject to financial penalties for the violation and the possibility of an injunction to enforce performance.
Implied Contract FAQs
It is a non-verbal, unwritten, and legally-binding agreement that results from the parties' conduct or a specific circumstance.
When you take a taxi and instruct the driver, there exists an implied contract between you and the driver.
It is assumed that in return for his services, the taxi driver will get consideration in the form of money.
There are two types - implied in fact and implied in law.
The term implied-in-fact contract is deduced from parties' actions or circumstances associated with a particular case. In contrast, an implied-in-law contract is formed by the law when one party gets an unfair benefit at the expense of another.
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