What Is an Implied Contract?

Not all contracts have to be in writing or even express, meaning that the involved parties intentionally enter into an agreement to perform certain obligations. Rather, you may enter into an implied contract.

According to Corporate Finance Institute, an implied contract is one that is unwritten and non-verbal. Though rare, the law recognizes implied contracts if parties engage in certain behaviors or if a unique set of circumstances exist.

The characteristics of an implied contract

What sets an implied contract apart from an express contract — whether written or oral — is that the parties never expressly acknowledge an agreement or any terms that pertain to it. Rather, the parties can reasonably infer the agreement based on each other’s behaviors and/or the circumstances of their unique relationship. In either case, a tacit understanding develops between the parties that they have formed an agreement, whether intentionally or unintentionally.

An example of an implied contract is if your neighbor mows your lawn because he notices that you do not have a mower and you reciprocate by leaving him a check for $50. He does the same the following week, and the week thereafter, and you keep paying him. You essentially establish a business relationship with your neighbor without ever signing an agreement or acknowledging the business-like association.

The enforceability of implied contracts

In most jurisdictions, implied contracts carry just as much weight as express or written contracts. What this means is that states will likely enforce an implied contract if you or the other party can prove that a reciprocatory relationship exists between you two. However, note that implied contracts are often difficult to prove. That said, most jurisdictions require written contracts in some situations, such as when agreements involve the sale of land or other objects with high monetary value.

If you are party to an implied contract, it would be in your interests to protect your rights via other means. Consult with an attorney for tips on how to do that.

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