Implied Contract

Definition

An implied contract is a legally enforceable agreement inferred from the actions, conduct, or circumstances of the parties involved, rather than being written or verbally articulated. This type of contract can be equally binding as express contracts when the parties’ actions indicate a mutual intent to form a contract.

Examples

Real Estate Sale:
- Scenario: Abel posts a “For Sale” sign on his property with the note “See Your Broker.” Davis submits an offer through her broker and purchases the property. Abel later refuses to pay the broker’s commission.
- Outcome: The broker takes the matter to court, arguing that the sign created an implied contract that required Abel to pay the broker’s commission. The court typically finds that the sign did indeed create an implied contract.
Property Maintenance:
- Scenario: A tenant continually requests repairs from the landlord, and the landlord performs the repairs without a formal written agreement.
- Outcome: Over time, this can establish an implied contractual obligation for the landlord to maintain the property in a specified condition.

Frequently Asked Questions (FAQs)

Q: Are implied contracts legally binding?

A: Yes, implied contracts are legally binding, provided there is clear evidence of mutual intent and agreement demonstrated through actions or conduct.

Q: How can an implied contract be proved in court?

A: An implied contract can be proven through evidence showing that the parties’ conduct effectively established the terms of an agreement, such as through past transactions, behaviors, industry norms, and other circumstantial evidence.

Q: What separates implied contracts from express contracts?

A: The primary distinction lies in the communication method. Express contracts are clearly stated either verbally or in writing, whereas implied contracts are suggested through actions or fairness due to the circumstances.

Q: Can an implied contract override a written contract?

A: Generally, implied contracts cannot override a written contract unless the implied agreement introduces new terms not covered by the existing written contract or corrects an ambivalent term.

Q: What are some common examples of implied contracts in everyday life?

A: Examples include eating at a restaurant (which implies you’ll pay for your meal), utilizing the services of a hairdresser or mechanic, and certain types of brokerage agreements in property transactions.

Statute of Frauds: A legal statute requiring certain types of contracts to be in writing and signed to be enforceable, primarily focusing on real estate transactions.
Express Contract: A contract where the terms are explicitly stated by the parties, either orally or in writing.
Breach of Contract: The failure to fulfill the terms of a contract without a lawful excuse.
Broker Agreement: A written or implied contract between a real estate broker and a client, stipulating the broker’s obligations and the payment terms.
Obligation: A legal or moral duty bound by a contract or law.

Online Resources

Cornell Law School - Legal Information Institute: Implied Contracts
Nolo - Law for All: Implied Contracts
American Bar Association: Articles and resources on contract law, including implied contracts.

References

The Law Dictionary Featuring Black’s Law Dictionary Free Online Legal Dictionary 2nd Ed. Implied Contract Definition
Cornell Law School - Legal Information Institute (LII): Statute of Frauds

Suggested Books for Further Studies

“Contract Law: Selected Source Materials Annotated” by Steven J. Burton and Melvin A. Eisenberg
“Foundations of Contract Law” by Richard Craswell and Alan Schwartz
“Principles of Contract Law” by Robert A. Hillman

Real Estate Basics: Implied Contract Fundamentals Quiz

### Is an implied contract created through written or spoken words? - [ ] Yes, it must be expressed in writing or spoken to be valid. - [x] No, it is created by actions or circumstances implying agreement. - [ ] It must only be in writing. - [ ] spoken words only are permissible. > **Explanation:** An implied contract is not articulated through written or spoken terms but rather inferred from the parties' actions or circumstances. ### Can an implied contract be as enforceable as an express contract? - [x] Yes, both can be legally binding. - [ ] No, only express contracts are typically enforceable. - [ ] It depends on the judge. - [ ] Only if it is in the real estate industry. > **Explanation:** Implied contracts can be as enforceable as express contracts, provided that mutual consent is evident through the parties' actions. ### What element is critical for proving an implied contract? - [x] Mutual intent shown by conduct - [ ] Written agreement - [ ] Third-party witness - [ ] Formal registration > **Explanation:** The critical element to prove an implied contract is the mutual intent shown through the conduct of the parties involved. ### Can implied contracts override express written contracts? - [ ] Always - [x] Generally not, unless adding or clarifying terms - [ ] Yes, they can easily - [ ] Never, regardless of the scenario > **Explanation:** An implied contract generally cannot override a written contract unless it introduces new terms not covered or clarifies ambiguous language within the express contract. ### In which case can an implied contract legally arise? - [x] Broker commission based on actions and signs - [ ] Using government mail services - [ ] Verbal rental agreement for land - [ ] The purchase and use of public transport tickets > **Explanation:** An implied contract can arise in a situation like a broker's commission established by the seller's actions, such as a sign indicating a need for brokerage services. ### What law governs the necessity for certain contracts to be written? - [x] Statute of Frauds - [ ] Commercial Code - [ ] Fair Use Policy - [ ] Common Law of Contracts > **Explanation:** The Statute of Frauds governs the necessity for certain types of contracts to be in writing to be legally enforceable, primarily focusing on real estate. ### When eating at a restaurant, what kind of contract generally forms? - [x] Implied Contract - [ ] Express Contract - [ ] Hospitality Agreement - [ ] Service Rendered Contract > **Explanation:** When you eat at a restaurant, an implied contract forms where it's understood you will pay for the meal provided. ### An implied contract often emanates from what kind of actions? - [ ] Direct verbal agreements - [x] Consistent past behaviors - [ ] Written communication - [ ] Court orders > **Explanation:** Implied contracts often arise from consistent past behaviors indicating mutual agreement without formal utterance or documentation. ### Which would NOT be an example of an implied contract? - [x] A written and signed lease agreement - [ ] Using a mechanic’s services under mutual unwritten agreement - [ ] Receiving regular maintenance from a landlord informally - [ ] Utilizing taxi service without formally stating intention to pay. > **Explanation:** A written and signed lease agreement is an example of an express contract, not an implied contract, which is ticket or service-based inferred through conduct. ### Is broker commission an area where implied contracts can be significant? - [x] Yes, especially when actions suggest a brokerage agreement - [ ] No, always requires written contracts - [ ] Only verbal agreements hold significance - [ ] Real estate deals don’t involve brokers typically. > **Explanation:** Broker commission is significant in implied contracts, especially when the broker's services are suggested or where there is consistent industry behavior indicating an obligation.