What Is an Implied Contract?
An implied contract is a legally-binding obligation that derives from the actions, conduct, or circumstances of one or more parties in an agreement. It is assumed to exist, and no written or verbal confirmation is necessary.
One form of an implied contract is the implied warranty. When a product is purchased, it must be capable of fulfilling its function. A new refrigerator must keep food cool, or either the manufacturer or the seller has failed to meet the terms of an implied contract.
[Important: An implied contract has the same legal force as a written contract but may be harder to enforce.]
How an Implied Contract Works
The principle underlying an implied contract is that no person should receive unjust benefits at the expense of another person. A written or verbal contract is not needed to get fair play.
There are two forms of implied contract, called implied-in-fact and implied-in-law contracts.
An implied-in-fact contract is created by the circumstances and behavior of the parties involved. If a customer enters a restaurant and orders food, an implied contract is created. The restaurant owner is obligated to serve the food, and the customer is obligated to pay the prices listed on the menu for it.
An implied-in-fact contract may also be created by the past conduct of the people involved. For example, say a teenager offers to walk a neighbor's dog and is rewarded with two movie tickets. On three subsequent occasions, the teenager comes over to walk the dog and is given two movie tickets. But on the last occasion, the neighbor simply fails to produce the movie tickets. The teenager has a case for claiming that the neighbor created an implied-in-fact contract by regularly producing movie tickets in return for dog-walking services. It is a reasonable assumption.
The Implied-in-Law Contract
The other type of unwritten contract, the implied-in-law contract, can also be called a quasi-contract. It is a legally binding contract that neither party had the intention of creating. Say the same restaurant patron mentioned above chokes on a chicken bone, and a doctor dining at the next booth leaps to the rescue. The doctor is entitled to send a bill to the diner, and the diner is obligated to pay it.
The Disadvantages of an Implied Contract
An implied contract has the same legal force as an express contract, which is a contract that is voluntarily entered into and agreed on verbally or in writing by two or more parties.
However, the implied contract is more difficult to enforce. Proving the justice of the claim is a matter for argument, not a simple matter of producing a signed document.
In addition, some jurisdictions place limits on implied contracts. For example, a contract for a real estate transaction must be backed up by a written contract in some courts.
- An implied contract is created by the actions, behavior, or circumstances of the people involved.
- An implied contract has the same legal force as a written or verbal contract.
- In some instances, it is more difficult to enforce because of the lack of documentation.