Legal Definitions - implied contract

An implied contract is a legally binding agreement that is not explicitly stated in words, either orally or in writing. Instead, its existence is inferred from the actions, conduct, or circumstances of the parties involved, or it is imposed by a court to prevent one party from unfairly benefiting at another's expense. Implied contracts are generally divided into two main types:

• Implied-in-Fact Contract: This type of implied contract arises when the parties' actions and behavior demonstrate their intent to enter into an agreement, even if they never formally spoke or wrote down the specific terms. The agreement is understood through their conduct, and one party reasonably believes the other party's actions signify acceptance of an offer.

  • Example 1: A homeowner calls a local plumbing service to report a leaky faucet. The plumber arrives, assesses the issue, and without explicitly stating a price or getting a signed agreement, proceeds to fix the leak using new parts. The homeowner watches the plumber work and does not object.

    Explanation: By calling the plumbing service and then allowing the plumber to perform the repair without intervention, the homeowner's conduct implies an agreement to pay for the services rendered. The plumber reasonably interpreted the homeowner's actions as an acceptance of their offer to fix the leak, even though no explicit verbal or written contract was made.

• Implied-in-Law Contract (Quasi-Contract): Also known as a "quasi-contract," this is not a true contract based on mutual agreement. Instead, it is a legal obligation imposed by a court to prevent one party from unfairly benefiting at another's expense. The court steps in to ensure fairness and requires the unjustly enriched party to compensate the other for the benefit received. There is no requirement for an actual "meeting of the minds" or agreement between the parties.

  • Example 2: A delivery company mistakenly drops off a pallet of expensive, specialized computer servers at the wrong business address. The owner of the business at that address realizes the mistake but, instead of notifying the delivery company or the intended recipient, accepts the delivery and integrates the servers into their own operations, knowing they did not pay for them.

    Explanation: Even though there was no agreement between the delivery company and the business owner who received the servers, a court would likely impose an implied-in-law contract. The business owner was unjustly enriched by receiving and using valuable equipment that did not belong to them. The court would require the business owner to compensate the delivery company (or the original owner of the servers) for their value to prevent this unfair benefit.