An implied contract, also known as an implied-in-fact contract, is a legally binding agreement that is not explicitly declared. Instead, it is inferred from the actions, conduct, or circumstances of the parties involved.
In other words, an implied contract is created when two parties have a mutual understanding of the terms and obligations of a contract, even though those terms are not specifically stated. This type of contract is often used in situations where the parties have a previous relationship or a longstanding business practice.
For example, imagine that you have been employed as a sales representative for a company for the past five years. During that time, your employer has consistently paid you a commission of 5% on all sales that you generate. While this commission structure was never formally written down or agreed upon, both you and your employer have operated under the assumption that it is the standard compensation arrangement.
In this scenario, an implied contract has been formed between you and your employer. Although there was no explicit agreement, the circumstances and behavior of both parties have established a mutual understanding and expectation that you will receive a commission of 5% on all sales that you generate.
Implied contracts can also arise in other situations, such as when a customer regularly purchases a product or service from a vendor without a formal agreement, or when a contractor provides services to a homeowner without a written contract.
It is important to note that while implied contracts are enforceable under the law, they can be more difficult to prove than explicit contracts. To ensure that all parties are clear on the terms and obligations of an agreement, it is always advisable to document the terms in writing.
In conclusion, an implied contract is a legally binding agreement that is inferred from the actions and circumstances of the parties involved. While they are enforceable under the law, it is always advisable to document the terms of any agreement in writing to avoid any misunderstandings or disputes.