An Implied In Fact Contract is a legally binding agreement that is formed based on the conduct, actions, or circumstances of the parties involved, rather than written or spoken words. Such contracts arise when the behavior of the parties demonstrates that they intended to form a contract and are bound by it, even if they did not explicitly state their agreement.
Characteristics of Implied In Fact Contracts
An Implied In Fact Contract must possess the essential elements of a traditional contract, namely:
- Mutual Agreement (Offer and Acceptance): The conduct of the parties must indicate a mutual agreement to the terms.
- Consideration: There must be something of value exchanged between the parties.
- Intention to Create Legal Relations: The conduct must show that the parties intended their agreement to be legally binding.
- Certainty and Completeness: The essential terms must be clear and complete from the conduct and facts.
Historical Context
The concept of implied contracts has roots in common law traditions, where judges recognized agreements not explicitly stated but inferred from parties’ behavior. This principle was essential in cases where formal contracts were impractical due to the nature of the parties’ dealings.
Applicability and Examples
Common Scenarios
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Employment Situations: An individual starts working for a company without a formal written contract but is paid for the work. Over time, both actions imply an understanding of employment terms.
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Service Provisions: A customer regularly receives goods or services and pays for them, creating an ongoing implied contract based on a history of transactions.
Legal Implications
Implied In Fact Contracts are treated with the same seriousness as express contracts in legal disputes. If a party fails to fulfill their part of an implied contract, they may be held liable for breach of contract.
Comparisons with Related Terms
Implied In Law Contract (Quasi-Contract)
Unlike Implied In Fact Contracts, Implied In Law Contracts (or quasi-contracts) are not based on the conduct of the parties but are imposed by courts to avoid unjust enrichment.
Express Contract
An Express Contract is formed through explicit statements, whether written or spoken, where terms are clearly stated and agreed upon by the parties involved.
Frequently Asked Questions
How is an Implied In Fact Contract enforced?
Courts enforce these contracts by evaluating the actions and conduct of the parties, the context of their interactions, and whether these imply a mutual agreement.
Can Implied In Fact Contracts be disputed?
Yes, these contracts can be disputed, particularly if one party argues that there was no mutual agreement or intention to form a legally binding contract.
What distinguishes an Implied In Fact Contract from mere social agreements?
For an Implied In Fact Contract to be legally binding, there must be an intention to create legal relations; casual social agreements generally lack this element.
What evidence is used in court to prove an Implied In Fact Contract?
Evidence can include the behavior of the parties, past transactions, documentation of actions taken by both parties, and surrounding circumstances indicating an agreement.
Summary
Implied In Fact Contracts are integral to understanding business and personal obligations where formal agreements are not explicitly stated. By recognizing the behavior and factual circumstances of the parties, these contracts ensure that agreements are honored and disputes are resolved fairly. As such, they form a crucial part of contract law and the overall legal framework regulating interpersonal and business relationships.
References
- McKendrick, E. - Contract Law: Text, Cases, and Materials (2018)
- Chitty on Contracts - Sweet & Maxwell, London (2018)
- Restatement (Second) of Contracts - American Law Institute
