An implied contract is an agreement between two parties that is not explicitly stated, but is inferred from the conduct of the parties involved. In other words, the parties come to an understanding through behaviors that suggest an expectation of contract performance.
When a situation involves an implied contract, it’s important to examine the actions of the parties to determine if a contract is being formed. For example, if a person pays for a service without any discussion of the terms, a court may infer that the parties meant for a contract to be formed.
Modern Uses of Implied Contracts
Implied contracts are found in many modern business transactions. In the digital age, parties may form contracts through emails and other online communications without verbally discussing the details of the agreement. The price of goods or services paid might indicate an implication of agreement.
In retail situations, a customer may buy a product and the seller might begin to perform services related to the product, such as offering warranties or repairs. This could suggest to a court that an implied contract exists.
Advantages and Disadvantages of Implied Contracts
Implied contracts can be beneficial in that the parties involved do not have to go through all the details of formalizing the agreement. However, it can also be difficult to prove the existence of an implied contract if the parties do not have any proof of their understanding. The burden of proof is on the claiming party in such cases.
There is also always a risk of misinterpretation in an implied contract situation. Both parties must be sure that they understand what the other is expecting before they take any action. If there is a misunderstanding, then the potential exists for a breach of contract situation.
Conclusion
Implied contracts are a form of agreement that can be used in business transactions. While they come with some risks, such as misinterpretation and difficulty proving the existence of the agreement, they can offer some benefits, such as allowing parties to avoid lengthy formalization of the contract.