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Implied Contract: Definition, Example and Related Terms

What is an Implied Contract ?

An implied contract is an agreement that is not explicitly stated in written or spoken words but is understood to exist based on the actions, conduct, situation, or relationship of the parties involved. It's like a mutual understanding that isn't formally documented but is recognized and enforced by law because of how the parties behave.

For example, if a person walks into a restaurant, orders food, and eats it, there is an implied contract that they will pay for the meal. Even though the diner and the restaurant owner didn't explicitly state the terms, their actions create an enforceable contract.

Understanding implied contracts is crucial in legal and business contexts as they can help identify obligations and responsibilities that are not formally stated but are nonetheless binding. Implied contracts can arise in many everyday situations and are recognized by courts when it is clear that the parties intended to form a contractual relationship through their conduct.

It's important to note that not all situations where people cooperate or interact would result in an implied contract. The key factor is the reasonable expectation that a contractual relationship was intended. This can help avoid disputes and provide clarity on the parties' obligations.

Example(s)

  • Scenario Description
    A person hires a neighbor to mow their lawn every week without a written or spoken agreement. Even though there is no formal agreement, if the neighbor performs the service and the person pays for it regularly, an implied contract is formed based on their conduct.
    A patient visits a doctor for treatment. There is an implied contract that the patient will pay for the medical services provided, even though the specific terms are not explicitly stated during the visit.