Implied Promises Clause: Everything You Need to Know
An implied promises clause is an agreement within a contract that is unwritten and enforceable based on the actions and circumstances of the parties involved.3 min read
An implied promises clause is an agreement within a contract that is unwritten and enforceable by law based on the actions and circumstances of the parties involved. A contract establishes a legally enforceable agreement between two or more parties. The contract can include an agreement to perform a task, or in some cases, refrain from doing something.
Types of Contracts
Contracts can document a wide variety of agreements between parties. A contract should list the rights and duties of both parties. Based on the contract type, there are differences in how they will affect the involved parties. Contract types include:
- Contracts under seal. These are stamped with a seal that acts as a way to show that the parties involved have agreed to the terms.
- Express contract. This is a written or oral contract that clearly states the terms of the contract and where both parties agree to the terms at the time the contract is created.
- An implied contract. This includes obligations that come from a mutual agreement and promises that were not verbally expressed.
- An executed contract. This means that a future obligation must be met due to the terms of the contract.
- A contract implied in fact, which is a true contract.
- A contract implied in law, which is is an obligation that is imposed by law.
Types of Implied Contracts
Implied-in-fact contracts refer to unwritten contracts that the parties are expected to understand and complete due to actions, conduct, or circumstances. For example, if a vendor ships products to a customer and the customer receives the shipment without paying, then either resells the products or use them to make another product, a contract to buy and sell is inferred. Once an implied contract has been created, the customer will be expected to pay for the goods they received.
Implied-in-law contracts are quasi-contracts. A quasi-contract involves an obligation that is imposed by the law due to the relationship between parties or if one of the parties in the relationship would unjustly benefit. For example, if you choke on a piece of food at a restaurant and a doctor performs the Heimlich maneuver which saves your life and then sends you a bill for their services, the law would examine the fairness of the situation and consider whether you benefited from the albeit short-lived relationship.
Avoiding Implied Employment Contracts
As an employer, implied contracts are based on what is said. Care should be taken to avoid inadvertently implying promises that the employee may understand to be fact. This can be performance standards or an expectation related to pay raises and bonuses. If a company has a history of providing a bonus, such as a Christmas bonus, the employees will have a reasonable expectation of receiving one every year. A court will often agree with this as an implied contract. Any implied promises can alter the ability to modify a written employment contract.
Employers should use employment contracts as a way to show that benefits are discretionary and may change over time. If changes take place, employees should receive notification in writing. The employment contract should also state the following:
- The form of payment the employee can expect (paycheck or direct deposit).
- When paychecks will be expected (weekly, biweekly, monthly).
- Timeframes in which employees are expected to receive bonuses or earn stock.
- How vacation time, sick days, or other days off are accrued.
- Relocation terms and repayment.
- The length of time the contract is valid, if applicable. A set time is not required for all contracts.
- When and why an employer or employee may terminate their contract.
- Non-compete clauses to prevent the sharing of proprietary information or trade secrets.
The employer should not use job descriptions that are too detailed as it may prevent the ability to move the employee to another job position. The contract should also include a clause related to the jurisdiction. This is important if the employer is in one jurisdiction and the employee is in another. By including a clause, the employer makes the decision about which jurisdiction will be responsible for upholding the contract and the laws that regulate the contract. This is called choice of law.
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