An implied contract is a legally enforceable agreement that arises from the actions, behaviors, or circumstances of the parties involved rather than their written or spoken words. These contracts are based on the principle that certain actions or circumstances imply mutual intent to form a contract, even if there’s no explicit agreement.
Types of Implied Contracts
Implied-in-Fact Contracts
Implied-in-fact contracts are agreements inferred from the conduct of the parties involved:
- Conduct and Relationship: If two parties consistently engage in a business transaction that suggests an expectation of services and payment, an implied-in-fact contract may be formed.
- Example: If A regularly mows B’s lawn, and B always pays A afterward, even without a spoken or written agreement, such conduct can create an implied-in-fact contract.
Implied-in-Law Contracts (Quasi-Contracts)
These contracts, unlike implied-in-fact contracts, are not true contracts. They are instead judicial constructs imposed to prevent unjust enrichment, designed to promote fairness:
- Prevention of Unjust Enrichment: If one party is unjustly enriched at the expense of another, a court might impose a quasi-contract to require the enriched party to compensate the other.
- Example: If A mistakenly delivers goods to B, who knowingly accepts them, A may claim a quasi-contract to recover the value of the goods.
Legal Considerations of Implied Contracts
Statute of Frauds
The Statute of Frauds is a legal concept that requires certain types of contracts to be in writing to be enforceable:
- Requirements: Contracts involving significant items, such as land sales or agreements lasting more than one year, typically must be documented.
- Limitations: Implied contracts might be challenging to enforce when the Statute of Frauds applies unless the circumstances support an exception to the rule.
Enforceability and Evidence
The enforceability of an implied contract relies heavily on the evidence provided:
- Behavior and Communication: Evidence of consistent past conduct and communication that implies mutual agreement is crucial.
- Third-Party Testimony: Testimonies from third parties who can confirm the interactions may strengthen the case for an implied contract.
Examples of Implied Contracts
- Employment Arrangements: An employee working without a formal contract but receiving regular paychecks might demonstrate an implied employment contract.
- Service Transactions: An implied contract can occur when someone provides a service, like emergency home repairs, expecting reasonable compensation.
Historical Context and Applicability
Historical Development
The concept of implied contracts has deep roots in common law traditions, reflecting a natural sense of justice and fairness that evolved over centuries.
Modern Applications
Implied contracts are common in various modern contexts, such as business practices, employment relationships, and everyday transactions, where expectations and behaviors form the basis of mutual obligations.
Comparison with Express Contracts
Implied vs. Express Contracts
- Clarity: Express contracts are explicitly stated in words, either orally or in writing, while implied contracts are inferred from actions.
- Documentation: Express contracts often have detailed documentation, whereas implied contracts may lack formal written agreements.
- Enforcement: Both types can be legally enforced, but implied contracts often require more substantial evidence to prove their existence.
Related Terms
- Express Contract: A contract where terms are explicitly stated and agreed upon.
- Breach of Contract: Failure to perform any term of a contract without a legitimate legal excuse.
- Offer and Acceptance: Fundamental components of a valid contract.
FAQs
Can an implied contract be legally binding?
What is the difference between an implied-in-fact and an implied-in-law contract?
How does the Statute of Frauds affect implied contracts?
References
- Restatement (Second) of Contracts, American Law Institute.
- Chirelstein, M. A., Concepts and Case Analysis in the Law of Contracts (7th ed.).
- Williston, S. & Lord, R. A., A Treatise on the Law of Contracts.
Summary
An implied contract is a nuanced and significant legal concept where agreements are formed through actions and behaviors rather than explicit words. Understanding implied contracts helps navigate scenarios where written or oral agreements are absent but mutual obligations are evident, ensuring justice and fairness in various legal and practical domains.
