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Definition Implied Contract Example

When two parties engage in a business relationship, they may enter into a formal written agreement outlining the terms and conditions of their arrangement. However, in some cases, an implied contract may exist where the terms are not explicitly stated in writing. Instead, the terms may be inferred from the actions and behaviors of the parties involved. This type of contract is known as an implied contract, and it`s essential for businesses to understand how it can impact their operations.

An implied contract is a legally binding agreement that arises implicitly, through the actions and conduct of the parties involved. Essentially, it`s an unwritten agreement that`s based on the parties` behavior, course of conduct, or industry norms. While it may not be in writing, an implied contract is still enforceable under the law, and both parties are expected to fulfill the obligations outlined in it.

One example of an implied contract is an employee/employer relationship. Even though there may be no formal written agreement between the two parties, the employer is obligated to pay the employee for the work they perform. The expectation of payment is implied in the employer-employee relationship, and if the employer fails to pay, the employee can sue for breach of contract.

Another example of an implied contract is an agreement between a service provider and their client. For instance, if a plumber is hired to fix a leaky faucet, the client expects the plumber to provide the necessary tools and equipment to complete the job. The expectation of providing the necessary tools and equipment is implied in this type of service agreement, and the plumber can be held liable if they fail to deliver on this expectation.

In summary, an implied contract is an unwritten agreement between two parties that`s based on their actions and behaviors. While it may not be in writing, it`s still legally binding and enforceable under the law. Businesses should be aware of the potential for implied contracts to arise in their operations and ensure that they comply with any expectations that may be implied by industry norms or the parties` conduct. By understanding the concept of implied contracts, businesses can avoid costly legal battles and maintain healthy relationships with their clients, employees, and suppliers.