Implied Contract: Meaning, Types, Features, Examples & FAQs

An implied contract is a legally enforceable duty that results from the deeds, behavior, or conditions of one or more parties to an agreement. It has the same legal effect as an explicit contract, which is freely entered into and decided upon by two or more parties, either orally or in writing. Contrarily, the implied contract is presumed to exist and does not require either verbal or written confirmation.

Key Takeaways

• The circumstances, conduct, or acts of the parties concerned give rise to an implied contract.
• The legal power of an implied contract is equal to that of a written or spoken agreement.
• It is presumed that the implied contract, such as an implied warranty exists, and confirmation is not required.
• In certain situations, it is more difficult to enforce an implied contract due to a lack of paperwork.

1. Implied-in-fact Contracts

Contracts that are implied-in-fact result from the actions of the parties. Rather than being based on the parties’ written or spoken words, these contracts are based on the acts of the parties and the circumstances surrounding those actions. Put differently, when parties act as though they had a contract even though they haven’t really discussed or agreed upon its terms, an implied-in-fact contract is established.

2. Implied-in-law Contracts

Implied-in-law contracts are also referred to as quasi-contracts; these contracts are not really contracts at all. The courts establish them in order to stop unfair enrichment. Put differently, a court may enforce an implied-in-law contract requiring one party to pay another if the first party obtains a benefit from the latter and it would be unreasonable for the first party to maintain the advantage without making payment.

1. Mutual Intent: Implied contracts require mutual assent or agreement between the parties involved, even though the terms may not have been explicitly discussed. The parties must demonstrate through their actions or behavior that they intended to enter into a contractual relationship.

2. Conduct-Based: Unlike express contracts, which are clearly outlined in written or verbal terms, implied contracts are based on the conduct or actions of the parties involved. These actions imply an understanding of the terms and obligations of the agreement.

3. Reasonable Expectations: Implied contracts are based on what a reasonable person would expect given the circumstances. The terms and conditions of the agreement are inferred from the actions, customs, or industry norms relevant to the situation.

4. Enforceability: Implied contracts are legally enforceable, provided that all the elements of a contract are present, including offer, acceptance, consideration, and intent to create legal relations. Courts may enforce implied contracts to ensure fairness and uphold the parties’ reasonable expectations.

5. Types of Implied Contracts: There are different types of implied contracts, including implied-in-fact contracts and implied-in-law contracts (also known as quasi-contracts). Implied-in-fact contracts arise from the parties’ conduct and circumstances, while implied-in-law contracts are created by courts to prevent unjust enrichment or unfairness.

Example 1: Sam enters a hair salon, sits down in a chair, and asks for a haircut, which the barber then provides. By asking for the haircut, Sam has impliedly agreed to pay for the haircut. By beginning to cut the hair, the barber has impliedly agreed to provide that service in exchange for monetary compensation.

Example 2: Ryan, a doctor, witnesses his neighbor collapse on his front porch as he chances to be strolling past his home. After rushing to his neighbor’s aid, Ryan discovers that he has had a stroke and treats him medically until help from the emergency services arrives. Later, Ryan gives the neighbor the bill for his medical services. In this case, the court will acknowledge the existence of an implied-in-law contract between Ryan and his neighbor because the fundamental justice principle suggests that Ryan should be fairly compensated for the professional services he rendered, even though the neighbor neither requested the services nor had any intention of paying Ryan at the time.

An explicit contract is a legally enforceable agreement, whether written or verbal, that is knowingly entered into and acknowledged by both parties as a commitment to carry out certain tasks. The majority of contracts include some sort of benefit exchange, whereby one party receives products or services and the other side is compensated for the goods or services rendered. Implied agreements are created between the parties by inferring from their behavior and the surrounding circumstances, even in the absence of an explicit written or verbal agreement. This is what makes an implied contract unique.

Do implied contracts hold up in court?

Implied agreements are enforceable by law and are subject to judicial review. In contrast to contracts that are made verbally or in writing, it may be difficult to prove that one exists or was ever created. Courts frequently examine a variety of factors, including the parties’ connection, the existence of prior agreements, and the fulfillment of obligations.

What are the requirements for an implied-in-fact contract?

An offer, an acceptance of the offer, mutual consent, and consideration are necessary for an implied-in-fact contract. The parties’ actions will serve as proof of the agreement’s provisions and implementation.

Are express contract different from an implied contract?

A meeting of the minds and mutual agreement are necessary for both express and inferred contracts. An oral or written agreement is necessary to officially construct an explicit contract, nevertheless. An implied contract is created by events or party behavior.

What are the requirements for an implied-in-law contract?

An implied-in-law contract is made by circumstances as opposed to intentionality. When one party receives products or services that are not given freely, the recipient is required to provide consideration. The beneficiaries must be unequally enriched, which means that there cannot be an imbalance of advantages between the parties.

What are the advantages of an implied contract?

When agreements aren’t specified clearly, implied contracts offer clarity. They provide adaptability, flexibility, and a way for parties to carry out their responsibilities even in the absence of official documents.

Reference:

• Cornell Law School

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