Legal Definitions - contract implied in fact

A contract implied in fact is a legally binding agreement that arises from the actions, conduct, and circumstances of the parties involved, rather than from their explicit spoken or written words. While there's no formal verbal or written statement of agreement, the behavior of the individuals clearly indicates their mutual intention to enter into a contractual relationship.

For such a contract to exist, the surrounding facts and circumstances must demonstrate:

• An unambiguous offer (implied by actions)
• An unambiguous acceptance (implied by actions)
• A mutual intent to be bound by the agreement
• Consideration (something of value exchanged between the parties)

These elements are fundamental to all contracts. The key distinction for a contract implied in fact is that these elements are understood and established through the parties' conduct, rather than through direct verbal or written communication. These are considered true contracts and are fully enforceable by law.

Here are some examples to illustrate this concept:

• Example 1: Professional Services

  Imagine you bring your car to an auto repair shop, park it in the designated service bay, and hand your keys to a mechanic, briefly explaining that your brakes are squealing. The mechanic takes the keys, writes down your car's mileage, and drives it into the garage to begin diagnostic work. You don't explicitly state, "I offer you to fix my brakes for a fee," nor does the mechanic say, "I accept your offer."

  How it illustrates the term: Your actions (bringing the car, handing keys, explaining the issue) imply an offer for repair services. The mechanic's actions (taking keys, noting mileage, starting work) imply acceptance. The context of an auto repair shop establishes a mutual intent for a paid service (consideration). A contract implied in fact exists for the mechanic to diagnose and repair your car, and for you to pay for those services.

• Example 2: Recurring Home Services

  A homeowner regularly leaves their trash bins at the curb on collection day. A local waste management company's truck consistently picks up the bins and empties them. The homeowner then receives and pays a monthly bill from the company, even though they never signed a written service agreement or verbally agreed to a specific contract term.

  How it illustrates the term: The homeowner's repeated action of placing bins out implies an offer for waste collection services. The company's consistent collection of the trash implies acceptance. The regular billing and payment demonstrate mutual intent to be bound by an agreement for ongoing service in exchange for payment (consideration). This pattern of behavior forms a contract implied in fact.

• Example 3: Everyday Transactions

  You walk into a self-service coffee shop, pour yourself a cup of coffee, and then proceed to the cashier. You place the cup on the counter, and the cashier rings up the price. You pay the amount, and the cashier hands you a receipt.

  How it illustrates the term: Your action of pouring coffee and presenting it at the register implies an offer to purchase it at the shop's established price. The cashier's action of ringing it up implies acceptance of your offer. The common understanding of a retail transaction creates the mutual intent for the exchange of goods for money (consideration). No explicit verbal agreement was necessary; the actions of both parties clearly formed a contract.