Implied Contract

Introduction

Contracts are an essential part of any business transaction, providing a legal framework that outlines the rights and obligations of the parties involved. While most contracts are explicitly written and signed, there is another type of contract that exists, known as an implied contract. In this article, we will explore the concept of implied contracts in English law, understanding what they are, how they are formed, and their implications for businesses and individuals.

What is an Implied Contract?

An implied contract is a legally binding agreement that is inferred from the conduct, actions, or circumstances of the parties involved, rather than being explicitly stated in writing or orally. Unlike express contracts, which are explicitly agreed upon by the parties, implied contracts are formed based on the presumed intentions and expectations of the parties.

Implied contracts can arise in various situations, such as when a customer enters a store and purchases goods, or when an employee performs work for an employer without a written employment contract. These contracts are based on the principle of fairness and the assumption that parties would not engage in certain actions without an underlying agreement.

Types of Implied Contracts

There are two main types of implied contracts: implied-in-fact contracts and implied-in-law contracts (also known as quasi-contracts).

Implied-in-Fact Contracts

An implied-in-fact contract is formed when the parties' conduct and actions indicate an intention to enter into a contract, even though the terms are not explicitly discussed or agreed upon. This type of contract is based on the parties' conduct and the circumstances surrounding the transaction.

For example, if a customer goes to a restaurant, orders a meal, and consumes it, an implied-in-fact contract is formed. The customer is expected to pay for the meal, and the restaurant is expected to provide the food and service. Although there is no explicit agreement, the conduct of the parties implies a contractual relationship.

Implied-in-Law Contracts (Quasi-Contracts)

An implied-in-law contract, also known as a quasi-contract, is not a true contract but a legal remedy imposed by the court to prevent unjust enrichment. It is a fictional contract created by the court to ensure fairness and prevent one party from benefiting at the expense of another.

For example, if a contractor mistakenly builds a fence on the wrong property, the court may impose an implied-in-law contract to require the property owner to compensate the contractor for the value of the fence. This is done to prevent the property owner from unjustly benefiting from the contractor's work without paying for it.

Formation of Implied Contracts

The formation of an implied contract requires certain elements to be present. While the specific requirements may vary depending on the jurisdiction, there are generally three key elements:

• Intent: The parties must have intended to enter into a contractual relationship, even if it was not explicitly stated.
• Offer and Acceptance: There must be an offer made by one party and an acceptance of that offer by the other party, either through their conduct or actions.
• Consideration: There must be some form of consideration, such as goods, services, or money, exchanged between the parties.

It is important to note that the terms of an implied contract may not be as clear or specific as those in an express contract. The terms are often inferred from the parties' conduct and the circumstances surrounding the transaction.

Examples of Implied Contracts

Implied contracts can be found in various aspects of everyday life. Here are a few examples:

• Supermarket Purchases: When a customer picks up items from the shelves and proceeds to the checkout counter, there is an implied contract to purchase those items at the displayed price.
• Employment Relationships: In the absence of a written employment contract, an implied contract may be formed based on the employee's performance of work and the employer's payment for that work.
• Professional Services: When a person seeks professional advice or services, such as consulting or legal advice, there is an implied contract that the professional will provide those services with reasonable care and skill.

Implications of Implied Contracts

Implied contracts have several implications for businesses and individuals:

• Enforceability: Implied contracts are legally binding and enforceable in court, just like express contracts. Parties can seek remedies for breach of an implied contract if one party fails to fulfill their obligations.
• Flexibility: Implied contracts provide flexibility in situations where parties may not have explicitly discussed or agreed upon the terms. They allow for the formation of contracts based on the parties' conduct and the circumstances surrounding the transaction.
• Uncertainty: The terms of an implied contract may not be as clear or specific as those in an express contract. This can lead to uncertainty and potential disputes if the parties have different interpretations of their obligations.

Conclusion

Implied contracts play a significant role in English law, providing a legal framework for agreements that are inferred from the conduct, actions, or circumstances of the parties involved. They are formed based on the presumed intentions and expectations of the parties and can be either implied-in-fact contracts or implied-in-law contracts. While implied contracts offer flexibility and enforceability, they can also lead to uncertainty and potential disputes due to the lack of explicit terms. Understanding the concept of implied contracts is crucial for businesses and individuals to navigate their legal obligations and rights in various transactions.