While many agreements between parties are expressly negotiated and memorialized in writing, sometimes a contract can be created without a party’s knowledge or intent. An implied contract is an unwritten agreement that materializes from the actions of the parties. The two types of implied contracts –implied-in-fact and implied-in-law – are legally enforceable in a court of law.
Implied-in-fact. An implied-in-fact contract can be inferred from the actions of the parties or the circumstances of their interaction. The conduct of the parties suggests that a contract was present even if the parties did not explicitly enter into an agreement. The court examines the conduct of the parties to decide whether a contract was formed. An implied-in-fact contract is an actual contract, while an implied-in-law contract, as described below, is only treated as a contract in order to enforce a remedy.
Implied-in-law. Certain contracts arise from the nature of the relationship between the parties and are intended to prevent one party from obtaining unjust enrichment. In this type of contract, a duty to carry out certain obligations is imposed by law and the courts may find that a contract existed, even if such a conclusion contravenes the wishes or intent of one of the parties. In the interest of equity, one party would be entitled to restitution if a contract in-law is implied. This is also referred to as a quasi-contract because a contract is said to exist in the absence of intent to create one. The court’s overriding goal in enforcing this type of contract is to ensure that a beneficiary of the quasi-contract pays fair value for the services performed for his benefit. In all cases, a court will not find that an implied contract exists if it would result in damage or inequity.
An oral contract should be differentiated from an implied contract, even though both appear similar in nature due to the absence of a written document. Oral contracts are no less valid than written contracts, assuming they meet all the criteria for a contract. Thus, an oral contract consists of agreed-upon-promises, while an implied contract is not comprised of mutually consented-to obligations and promises.
Contact Shane Coons at 949-333-0900 or visit his website at www.ShaneCoonsLaw.com to find out more about his practice.