An implied in law contract vs. implied in fact is the difference between an agreement that must be inferred by the actions of each party (the latter) and one that must be made by the court to uphold justice and/or correct unjust enrichment (the former).

Express Contracts

Any binding agreement between two or more parties, either written or spoken, is called an express contract. Both parties agree to perform certain obligations and must understand the contract terms and intend to be legally bound by them. In the simplest type of contract, one party promises to provide goods or services to another party in exchange for payment. Express contracts must consist of an offer that is accepted by the other party by mutual intent, with consideration (an item of value) offered on both sides.

About Implied in Fact Contracts

This type of contract often hinges on common industry usage or an ongoing business relationship. With an implied in fact contract, the parties act in such a way that indicates they intend to be in an agreement with one another, even if an oral or written agreement has not been established. For example, if a company was doing business with a client under a contract that expired, but they continued to act as if the contract was in effect, this is considered an implied in fact contract.

Like an express contract, an implied in fact contract must consist of an offer, acceptance, consideration, and mutual intent. However, the terms are not stated outright and must be inferred by the parties' behavior in dealing with one another.

Case law that supports the idea of an implied in fact contract includes Baltimore & Ohio Railroad Co. vs. United States, in which the decision stated: “founded upon a meeting of minds, which, although not embodied in an express contract, is inferred, as a fact, from conduct of the parties showing, in the light of the surrounding circumstances, their tacit understanding.”

In Russell v. United States, the judge found that (“To give the Court of Claims jurisdiction the demand sued on must be founded on a convention between the parties — ‘a coming together of minds' ”). By contrast, an agreement implied in law is a “fiction of law” where “a promise is imputed to perform a legal duty, as to repay money obtained by fraud or duress.”

Infringement and Implied in Fact Contracts

If someone else uses your ideas, words, creative work, or intellectual property without permission, he or she could be in breach of an implied in fact contract. To successfully such for this breach, you must prove that:

  • You sold the work in question to the defendant in exchange for payment.
  • The defendant should have known or knew that payment was required.
  • The defendant voluntarily accepted the work and used it.
  • The work has inherent value.
  • The defendant implied that he or she would pay for the work.

About Implied in Law Contracts

When the court is required to uphold justice, the law may call for the formation of an implied in law contract. For example, if one person benefits from another person without legal entitlement, this is called unjust enrichment. The law will require the enriched party to make restitution to the other party even if no oral or written contract to that effect exists.

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