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Implied Contract

Reviewed by Sweta | Updated on Sep 30, 2020

Catalogue

Introduction

An implied contract arises from the conduct of the parties. The contract creates legally binding obligations between parties.

The contract is not based on any written or oral agreement between the parties. An example of an implied contract is implied warranty arising upon purchase of a product. A product purchased is expected to perform certain functions. The warranty creates legal obligations from the manufacturer to the buyer about the functioning of the product.

Understanding Implied Contract

An implied contract also arises from the circumstances of the parties to an agreement. The contract is assumed to exist without any oral or written agreement. The essence of an implied contract is that no person should be unjustly benefitted at the expense of another.

An implied contract may be created by the past actions of the parties. For example, a doctor visits a patient at his residence once a week for a regular check-up and is paid Rs 500 for each visit. On the last couple of visits, the patient omits to pay for the visit. The doctor makes a claim for the fee on the basis of an implied contract. The doctor can claim the fee based on the regular conduct of the parties.

More About Implied Contract

The act and conduct of the parties in a situation may give rise to an implied contract. For example, an individual enters a restaurant and orders food. A contract to receive the food, service, and the payment for the same is established.

An implied contract is legally binding in the same manner as a written contract. An implied contract is difficult to enforce, unlike a written contract. In many countries, the law mandates certain contracts to be in writing.

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