Understanding Implied Contracts

What Are They? When Are They Binding?

Though there are some contracts that must be in writing to be enforceable, oral contracts are generally valid. Often, parties will verbalize the details of an agreement and clearly state that a contract has been formed. But there are situations where a contract may be implied because of the circumstances or actions of the parties.

What Is an Implied Contract?

An implied contract is one that meets all the requirements of a binding and enforceable agreement but which has not been expressly stated, either in writing or orally. Implied contracts are generally identified as either “implied-in-fact” contracts or “implied-in-law” agreements:

• An implied-in-fact contract is one established by the conduct or actions of the parties when reasonably construed to show mutual agreement. For example, when you buy goods at a retail store, you don’t typically make oral statements to confirm that you’re entering into a contract. Instead, a contract is implied when you pay for the goods.
• An implied-in-law contract is a bit more complex. Also known as a “quasi-contract,” an implied-in-law contract is what is commonly called a “legal fiction.” An implied-in-law contract is typically found where the requirements of a valid and enforceable agreement are not present, but one of the parties would unfairly benefit at the expense of the other party if the court did not imply the existence of a binding agreement. For example, if you are hurt and require emergency medical care, but you cannot sign a consent form because you are unconscious, a court could find you bound by an implied-in-law-contract to pay for your emergency care.

When Is an Implied Contract Binding?

An implied-in-fact contract is binding if the court can reasonably establish, from the parties’ actions, the five required elements of a valid contract:

• An agreement (offer and acceptance)
• Supported by consideration
• To perform a legal act
• Voluntarily entered into by both parties
• Who have the legal capacity to enter into a contract

An implied-in-law contract will be enforced if the court finds it necessary to do so to prevent an injustice or unjust enrichment of one party.

Contact MCIS Law

At MCIS Law, PLLC, in Stafford, we provide comprehensive counsel to businesses and business owners throughout southeast Texas, handling all matters related to business formation. For a confidential consultation with an experienced and knowledgeable lawyer, email us or call our office at (346) 297-0121. We accept all major credit cards.