What Is an Implied Contract?

What Is an Implied Contract?

Let me explain what an implied contract is—it's a legally binding obligation that comes from the actions, conduct, or circumstances of one or more parties in an agreement. It carries the same legal weight as an express contract, which is one that's voluntarily entered into and agreed upon verbally or in writing by two or more parties. With an implied contract, though, it's assumed to exist without any need for written or verbal confirmation.

Key Takeaways

You should know that an implied contract gets created by the actions, behavior, or circumstances of the people involved. It holds the same legal force as a written or verbal contract. Things like an implied warranty fall under this, where the contract is assumed to exist without any confirmation needed. Keep in mind, though, that without documentation, enforcing an implied contract can be more difficult in some situations.

Understanding Implied Contracts

The core idea behind an implied contract is that no one should gain unjust benefits at someone else's expense, and you don't need a written or verbal agreement for fair play. Take an implied warranty as an example—it's a type of implied contract. When you buy a product, it has to work as intended. If you purchase a new refrigerator, it must keep food cool; otherwise, the manufacturer or seller hasn't met the terms of that implied contract.

Enforcing an implied contract can be tough sometimes because proving the claim's fairness often turns into an argument, not just showing a signed document. Also, some jurisdictions limit implied contracts—for instance, real estate transactions might require a written contract in certain courts.

Important Note

Remember, an implied contract has the same legal force as a written contract but may be harder to enforce.

Implied-in-Fact vs. Implied-in-Law Contracts

There are two main forms of implied contracts: implied-in-fact and implied-in-law. An implied-in-fact contract comes from the circumstances and behavior of the parties. For example, if you walk into a restaurant and order food, an implied contract forms right there—the owner has to serve the food, and you have to pay the menu price.

This type can also stem from past conduct. Say a teenager offers to walk a neighbor's dog and gets two movie tickets as a reward. This happens three more times, but on the fourth, the neighbor doesn't provide the tickets. The teenager could argue there's an implied-in-fact contract based on the pattern—it's a reasonable assumption.

Continuing with Implied-in-Law

The other type, an implied-in-law contract, is also called a quasi-contract. It's legally binding but not something the parties intended to create. Imagine a restaurant patron choking on a chicken bone, and a doctor at the next table saves them. The doctor can bill the diner, and the diner must pay—it prevents unjust enrichment.

What Is an Implied Contract vs. an Express Contract?

Both express and most implied contracts need mutual agreement and a meeting of the minds. But an express contract is set up formally through oral or written agreement. An implied contract forms from circumstances or actions. A real estate deal is an express contract that must be in writing to be enforceable. Ordering a pizza creates an implied contract where the restaurant provides the pizza after payment.

Do Implied Contracts Hold Up in Court?

Yes, implied contracts are legally enforceable and can stand in court. Proving one exists can be challenging compared to oral or written contracts. Courts look at things like the parties' relationship, previous agreements, and duties performed.

What Are the Types of Implied Contracts and How Do They Differ?

Implied contracts are either implied-in-fact or implied-in-law. Implied-in-fact ones form when parties act as if a contract exists, assuming they understand the terms and actions required. Implied-in-law contracts aren't based on intent; they're there to stop someone from being unjustly enriched by another's performance.

What Are the Requirements for an Implied Contract?

Requirements vary by type, and neither is formed orally or in writing. For implied-in-fact, you need an offer, acceptance, mutual agreement, and consideration, all shown through behavior. For implied-in-law, circumstances create the contract without intent. If services or goods aren't given for free, the receiver must provide consideration to avoid unfair enrichment.

The Bottom Line

Implied contracts form from actions, conduct, or circumstances in an agreement, unlike express contracts that are oral or written. They're either implied-in-fact, based on intent and behavior, which are easier to prove in court, or implied-in-law, which prevent unfair enrichment without needing intent. For implied-in-law, standard rules like mutual agreement aren't required—it's about measurable benefits not intended as gifts.