In today’s guide, we'll share the key facts you need to know about implied contracts. These agreements are formed based on actions and behaviors rather than written or spoken words. Let's explore what makes implied contracts unique and how they work in everyday situations.

What is an implied contract?

An implied contract is an agreement that's formed based on the conduct or circumstances of the parties involved, rather than explicit terms. Unlike express contracts, which have clearly stated terms either in writing or verbally, implied contracts are inferred from actions and behaviors. 

For example, when you buy groceries at a store, you're entering into an implied contract to pay for the items you select.

Key characteristics of implied contracts

• Implicit agreement: Implied contracts are inferred from actions, not written or spoken words. When you sit down at a restaurant and order food, you're implying that you'll pay for your meal, even though you haven't explicitly agreed to do so.
• Mutual understanding: Both parties must have a common understanding of the agreement. For instance, when you hire a plumber to fix a leak, you both understand that you'll pay for the service, even if you haven't discussed payment terms.

Real-world examples of implied contracts

Let's look at some common situations where implied contracts occur:

• Services rendered: When you take your car to a mechanic for repairs, there's an implied contract that you'll pay for the work done.
• Goods purchased: Buying items at a store creates an implied contract to pay for them at the checkout.

Benefits of implied contracts

Implied contracts offer some advantages in certain situations:

• Flexibility: They allow for informal transactions without the need for formal paperwork. This is particularly useful for small-scale purchases or one-time services.
• Common understanding: Implied contracts rely on mutual understanding, which can be beneficial in regular transactions with trusted vendors or service providers.

Legal considerations for implied contracts

While implied contracts can be legally binding, there are some important points to consider:

• Enforceability: Implied contracts can be enforceable if the obligations are clear and accepted by both parties. However, proving the existence of an implied contract can be challenging without written documentation.
• Limitations: In complex or disputed transactions, implied contracts may have limitations due to the lack of written proof or ambiguity in terms.

Practical tips for recognizing implied contracts

To protect yourself when dealing with implied contracts, consider these tips:

• Document transactions: Keep receipts, invoices, or emails confirming services to help establish the existence of an implied contract.
• Communicate clearly: Even in informal agreements, it's helpful to confirm terms verbally or in writing to avoid misunderstandings.

Express contracts vs. implied contracts

The main difference between express and implied contracts lies in how they are formed and communicated. Express contracts have clearly stated terms, either written or spoken, that both parties explicitly agree to. 

For example, when you sign a lease agreement, you're entering into an express contract with clear terms. Implied contracts, on the other hand, are formed through actions or circumstances rather than explicit words. They rely on the conduct of the parties to infer an agreement. 

For instance, when you order food at a restaurant, there's an implied contract that you'll pay for your meal, even though you haven't explicitly agreed to do so. While both types of contracts can be legally binding, express contracts are generally easier to enforce due to their clear terms. Implied contracts may be more challenging to prove in court if a dispute arises. 

To wrap up

Implied contracts are a common part of everyday transactions. 

While they offer flexibility and convenience, it's important to be aware of their existence and potential implications. By understanding how implied contracts work, you can better protect your interests in various business and personal situations.