Understanding Implied Contracts: Meaning, Examples, and Legal Implications

What is an Implied Contract?

An implied contract refers to a legally-binding agreement that isn’t explicitly written or spoken but is instead created by the actions or circumstances of the parties involved. These forms of contracts are just as enforceable as written agreements, provided that the necessary elements of a contract are present: existence of an agreement, offer, acceptance, mutual assent, and consideration.

Implied contracts fall into two main categories: implied-in-fact and implied-in-law contracts.

Implied-In-Fact Contracts

Implied-in-fact contracts are formed by the conduct of the parties involved and suggest that both parties intend to be bound by the contract’s terms.

Implied-In-Law Contracts

Implied-in-law contracts, also known as quasi-contracts, are not true contracts. They are created by courts to prevent unjust enrichment of one party at the expense of another.

Real-Life Example

Let’s consider a real-life example to illustrate the concept of an implied contract.

Scenario: Abel posts a sign in his front yard advertising his property for sale. The sign reads, “See Your Broker.” Davis sees this sign and subsequently submits an offer through her BROKER to purchase the property. Abel refuses to pay the broker, who then claims in court that placing the sign constituted an implied contract to compensate his services once the sale was finalized.

Result:

In such a case, the court may rule that an implied contract exists based on Abel’s actions (posting the sign with instructions to see a broker) which prompted Davis and her broker’s actions.

Frequently Asked Questions

What are the key elements of an implied contract?

The essential elements are an offer, acceptance, mutual assent, and consideration—just like in express contracts.

How are implied contracts enforced?

Implied contracts are enforced by courts based on evidence of the parties’ conduct and circumstances that indicate an intent to form a contract.

Can an implied contract be enforceable if one party is unaware of it?

Yes. As long as the unknown party’s actions support the formation of a contract, the agreement could still be enforceable.

What is the Statute of Frauds?

The Statute of Frauds requires certain contracts to be in writing to be enforceable. However, implied contracts may be exceptions in some cases where specific actions suggest the existence of a contractual relationship.

What are the differences between implied-in-fact and implied-in-law contracts?

• Implied-in-fact contracts arise from mutual conduct suggesting a contractual agreement.
• Implied-in-law contracts are judicial remedies to prevent unjust enrichment, not based on mutual consent.

Related Concepts

• Express Contracts: Explicit agreements articulated in written or spoken words.
• Unjust Enrichment: A legal principle preventing one party from unfairly benefiting at another party’s expense.
• Negligent Misrepresentation: Misleading statements made without itemity to intention mislead.

Conclusion

Implied contracts play a subtle yet vital role in legal and business environments. While not indicated through written or spoken words, these contract types can depend largely on the context and actions of the involved parties. Understanding both implied-in-fact and implied-in-law contracts helps parties recognize more situations where such contracts may arise, ultimately safeguarding interests more proactively. }

Related Terms: Implied-In-Fact Contract, Implied-In-Law Contract, Statute of Frauds, Breach of Contract.