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Unraveling the Power of Implied Contracts: Formation Types and Legality

Title: Unveiling the Power of Implied Contracts: Definition, Formation, Types, and LegalityContracts are essential in the legal world, but not all agreements are explicitly stated in writing. Implied contracts, although not clearly expressed, hold immense weight in the legal landscape.

In this article, we explore the definition and formation of implied contracts, delve into their various types, and shed light on their legality and enforceability.

Definition and

Formation of Implied Contracts

Definition of an Implied Contract

At times, contractual obligations can be inferred from the behavior, actions, or conduct of parties involved. Such agreements are known as implied contracts.

These legally binding contracts arise when the intention of the parties is not explicitly expressed but implied by their actions and conduct. Key to the formation of an implied contract is the notion of mutual consent, regardless of its verbal or written absence.

Formation of Implied Contracts

Implied contracts come into existence through a meeting of the minds, whereby the parties involved willingly participate in an agreement, albeit not in a formal or overtly stated manner. The formation of an implied contract depends on the actions, circumstances, object, consideration, and capacity of the parties.

Both parties must display an intent to be bound by the agreement, even if they didn’t expressly negotiate its terms.

Types and Legality of Implied Contracts

Types of Implied Contracts

Implied contracts encompass various types, each possessing distinct characteristics and implications. The first type, implied in fact, materializes from the actions and conduct of the parties involved.

It is inferred from the circumstances surrounding the transaction and the conduct of the parties. The second type, implied in law or quasi-contract, is imposed by the court to prevent injustice or unjust enrichment.

It does not arise from the parties’ actual intentions but functions as a legal fiction to ensure fairness.

Legality and Enforceability of Implied Contracts

Implied contracts, like explicit contracts, are deemed legal and enforceable as long as they meet certain criteria. Although not explicitly written down, their equivalent legal effects arise from showing mutual consent, offer, acceptance, consideration, and capacity.

To establish the existence and enforceability of an implied contract, the intention of the parties must be objectively ascertained based on their actions and the surrounding circumstances. – An implied contract must be supported by consideration, meaning there must be a mutual exchange of promises or actions that benefit both parties.

– Implied contracts must be entered into voluntarily and without coercion or duress. – The parties must have the capacity to enter into a contract, meaning they must be of legal age and mentally competent.

In the eyes of the law, implied contracts have equal legal standing as explicit ones, allowing the aggrieved party to seek redress in a court of law if the contract is breached. Conclusion:

Understanding implied contracts unlocks the intricate web of unspoken agreements that influence legal consequences.

These contracts depend on inferred intentions, stemming from behavior, actions, and circumstances. While they do not possess the clarity of explicit contracts, their enforceability and legality are grounded in the mutual consent and intentions of the parties involved.

By exploring the formation, types, and legality of implied contracts, individuals can navigate the complexities of these agreements and protect their interests.

Comparison with Other Types of Contracts

Implied in Fact Contracts vs. Implied in Law Contracts

Implied contracts can be further categorized into two primary types: implied in fact contracts and implied in law contracts.

While both types share similarities, they differ in their formation and the legal remedies available in case of a breach. Implied in fact contracts arise when the actions and conduct of the parties involved indicate their intention to form a contractual relationship.

These contracts are deemed as valid as explicit (express) contracts. On the other hand, implied in law contracts, also referred to as quasi-contracts, are not actual agreements made voluntarily but legal fictions imposed by the court to prevent one party from unjustly enriching themselves at the expense of the other.

Implied in fact contracts focus on the intentions of the parties, whereas implied in law contracts prioritize fairness and preventing unjustified enrichment. In implied in fact contracts, the obligations and terms may be inferred from the conduct and words of the parties involved.

They generally arise due to the reasonable expectations of the parties involved in a particular situation. Implied in law contracts, however, are purely a creation of the law and do not rely on the intentions of the parties.

These contracts are imposed to avoid unjust enrichment, even if there is no actual agreement present. Suppose someone receives a benefit or payment unjustly, or if one party provides goods or services for another’s benefit without an underlying contract.

In that case, the court may impose an implied in law contract to remedy the situation and ensure fairness. In case of a breach of an implied in fact contract, the aggrieved party can seek legal remedies available for any breach of contract, such as damages or specific performance.

Conversely, implied in law contracts do not involve actual agreement and can only be enforced through an equitable remedy, usually involving restitution. The court, in such cases, orders the party unjustly enriched to return the value of the benefit received.

Implied in Fact Contracts vs. Oral Contracts

While implied in fact contracts are based on the actions, conduct, and behavior of the parties involved, oral contracts are based on the express intentions communicated verbally or in writing.

Both types share similarities, but the key distinction lies in their form and the method through which the agreement is reached. Implied in fact contracts can arise without any formal or explicit words of agreement.

They rely on the parties’ actions and conduct to infer their intentions to form a contractual relationship. Oral contracts, on the other hand, refer to agreements that are explicitly stated through spoken or written words, whether formal or informal.

Oral contracts require a clear offer, acceptance, and consideration, just like explicit contracts. While they may not carry the same weight as written contracts due to potential issues with proof and evidence, they are nevertheless legally binding.

The challenge with oral contracts lies in the difficulty of proving the terms of the agreement when a dispute arises. Nonethelesss, if the elements of a valid contract are present – offer, acceptance, consideration, and intention to create legal relations – oral contracts can be enforceable.

Implied in fact contracts, although not explicitly stated, can be inferred from the surrounding circumstances and the conduct of the parties involved. The conduct of the parties must be consistent with the existence of a contract.

Conversely, oral contracts explicitly lay out the terms, conditions, and expectations agreed upon by the parties involved, making their terms more clear and unambiguous. While oral contracts lack the formality and evidence that written contracts offer, they can still be valid and enforceable, as both parties express their intentions verbally.

Implied in fact contracts, however, carry the risk of misinterpretation due to the absence of a clear written agreement, making disputes more challenging to resolve.

Examples and Scenarios of Implied Contracts

Transport Contract

An example of an implied contract can be found in everyday scenarios, such as taking a taxi cab. When an individual hails a taxi, boards the vehicle, and reaches their destination, an implied contract is formed.

Although there is no explicit agreement, the conduct of the individual indicates an intention to pay for the transportation services rendered by the taxi driver, and the taxi driver, in turn, agrees to provide the transportation. The agreed-upon terms would include the payment of transportation fees, typically based on the taximeter or a mutually agreed-upon rate.

Employment Contract

Implied contracts also play a role in the realm of employment. In circumstances where an individual is regularly performing work for another party without any explicit employment contract, an implied contract may be deemed to exist.

This is often seen in situations where someone is hired on an informal basis, such as temporary or freelance work. Through repetitive conduct, such as showing up for work, performing tasks, and receiving payment from the employer, an implied employment contract can form.

While the terms of the agreement may not be explicitly discussed, there is a mutual understanding between the employer and the employee that work will be performed in exchange for compensation. The implied contract protects the rights and obligations of both parties and provides a legal framework for resolving any disputes that may arise.

Professional Services

Implied contracts also apply to professional services provided by individuals or companies. For example, a web developer who offers web hosting services to a client without a written contract.

The conduct of the web developer in providing the services and the conduct of the client in requesting and accepting those services establish an implied contract. Through the implied contract, the web developer has an obligation to host the client’s website and provide all related services, and the client has an obligation to pay the agreed-upon fees.

When either party fails to meet their responsibilities, such as the web developer not providing the hosting services as agreed or the client not paying the invoiced fees, a breach of the implied contract occurs. In such cases, legal remedies are available to the injured party to seek compensation for any losses suffered due to the breach of the implied contract.


Understanding the nuances of implied contracts, their formation, types, and legality, empowers individuals to navigate the intricate legal landscape. While they may not carry the same level of clarity as explicit contracts, implied contracts possess legal enforceability and offer protection to both parties involved.

By exploring the comparison with other types of contracts and examining real-world examples, individuals gain a deeper appreciation for the role and significance of implied contracts in various aspects of everyday life and professional interactions. In conclusion, implied contracts hold significant legal weight despite their absence of explicit terms.

These contracts are formed through inferred intentions and can be categorized as implied in fact or implied in law contracts. While implied contracts share similarities with oral contracts, they differ in their formation and the manner in which agreements are reached.

Understanding and recognizing implied contracts in various scenarios, such as transport services, employment relationships, and professional services, is crucial for navigating legal obligations and protecting one’s rights. By shedding light on the definition, formation, types, and legality of implied contracts, individuals can ensure fairness and enforceability in their agreements, even in the absence of explicit documentation.

Implied contracts are a testament to the complex nature of human interactions, reminding us that sometimes, it’s the unspoken agreements that carry the most weight.

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