Breach of Implied Contract: Everything You Need to Know
A breach doesn't need to be defined in a verbal or written agreement. Instead, it can be any negligence of principal, law, or obligation.4 min read
Updated November 23, 2020:
What is a breach of implied contract? A cause of action for a breach of implied contract has the same attributes as does a cause of action for breach of contract, except that the guarantee is not expressed in words, but is implied from the promisor's conduct.
What Is an Implied Contract?
An implied contract is created when there is no written or verbal contract between parties, but the courts have determined that a contract exists based on the actions of the parties or on the circumstances. In many cases, it's best to make sure all agreements are finalized in writing to prove the formalities of a contract exists.
However, if the court determines that there is an implied contract, it can create various responsibilities and duties for the parties involved. Therefore, implied contracts allow for the existence of specific contracts, even if there is no formal verbal or written agreement between the parties. In other words, an implied contract is a substitute for both a formal written contract and a verbal agreement.
For example, an implied contract is created when someone purchases a product that comes with a mandatory warranty that is issued by law. Implied contracts have identical legal authority as express contracts. Also, both are entered into voluntarily and are agreed to by all parties involved. However, the presence of an implied contract is significantly more challenging to justify in court due to the nonexistence of a written agreement. Many jurisdictions request that certain types of contractual agreements, such as real estate, need to be agreed to explicitly as express contracts.
The two categories of implied contracts include:
Implied-in-fact contracts are based on the situation and the requirements created between the parties. Also, one party tends to the agreement verbally and expresses an obligation to fulfill specific tasks, and provide assurance that they will be completed. Implied-in-fact contracts are also known as true contracts. The descriptive name of the contract identifies the situation: the facts presented generate an implied contract.
For example, John has an ATV with a snow plow attachment, and out of courtesy, he digs out his neighbor's driveway. When John's completed, the neighbor gratefully hands John $20. The next two times it snows and without being asked, John plows his neighbor's driveway. Once again the neighbor gives John $20, each time. However, the fourth time it snows, John plows the driveway but isn't given any money by the neighbor.
The next day John asks his neighbor for the $20 that is owed to him, but the neighbor refuses to pay him as he states that they never entered into a contract. The neighbor explains that he assumed John was just trying to be a good neighbor and wasn't looking to receive a payment.
If this particular situation were ever to go to court, the law would most likely be on John's side. The courts would ascertain that an implied-in-fact contract existed between John and his neighbor because John received three payments for his services, and the neighbor continued to have his driveway plowed without informing John that he wasn't going to pay him. Just because an express contract does not exist does not mean that a contractual relationship has not been created. The conduct and acts of the two parties may create an implied-in-fact contract.
An implied-in-law contract is an obligation created by law on the behalf of justice or to ward off unjust enrichment. It operates as a valid contract for purposes of remedy only; the general rules of contract do not apply to contracts implied in law.
Implied-in-law contracts are sometimes referred to as quasi-contracts. A quasi-contract is created when two parties have no intention of forming a contract or agreement, but by law, they must be forced into one because one party will be unjustly enriched, and the other will need to pay restitution.
What Is a Breach of Implied Contract?
A legal complaint is created when one party to an implied contract breaches the agreement. A breach doesn't need to be defined in a verbal or written agreement. Instead, it can be any negligence of principal, law, or obligation. It is this very general legal definition of a breach that causes so much confusion between parties and creates an abundance of lawsuits stemming from a breach of implied agreements.
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