Understanding the Implied-in-fact and Implied-in-law Contract

Understanding the Implied-in-fact and Implied-in-law Contract

Contracts can be either express or implied. This article is about implied contracts, in which the terms and conditions are not explicitly stated.

Tagged Under: Contracts
A contract can be defined as an agreement that is enforceable by law. In other words, it is an agreement for a stipulated consideration, between two or more competent persons or legal entities, to do or refrain from doing something that is allowed by law.

A contract can be either express or implied. The terms and conditions of an express contract are explicitly declared in words, either orally or in written format, at the time of making. Implied contracts lack these explicitly declared terms, but can be inferred from the circumstances and conduct of the parties. You can understand the concept of an implied contract, from the following examples.

Implied-in-fact Contract: You are taking your car to a repair shop for fixing some dents. While you expect the mechanic to do the work perfectly, the mechanic expects you to pay for his work. It is very rare to find a written agreement between a car owner and a mechanic, under such circumstances. Even though there is no formal agreement, there exists an implied contract between the two. This type of contract is also known as implied-in-fact contract. Implied contract of employment is nothing other than an agreement inferred from the conduct of the employee, or from the circumstances. For example, if the agreement of employment contract does not provide any specific condition for removal of the employee, it can be inferred that he has been hired for lifelong work. So, this type of contract is inferred from the facts and circumstances of the specific case, and is termed implied-in-fact contract.

Implied-in-law Contract: There is one more type of implied contract, which is not actually considered a contract. That is quasi contract, which is otherwise termed as a contract implied in law. This is not a contract, but can be considered as one, by the court, as a remedy to the aggrieved party, and to prevent unjust enrichment of the defendant, at the cost of the plaintiff. This can be explained with an example. A is knocked down by a car, and is found by B. B takes the unconscious A to the doctor C, who offers treatment. Once he regains his health, A may refuse to pay C, stating that there is no agreement between them. In such cases, the doctrine of quasi contract can be applied by the court, and order the person who has received unjust enrichment to pay the aggrieved party. Here, the remedial measure is imposed by the court, for the sake of justice. So, it is termed implied-in-law contract.

Though both types of implied contract lack explicit terms and conditions, they are different in their own way. An implied-in-fact contract can be inferred by the court, from the circumstances and conduct of the parties. An implied-in-law contract is one that is imposed by the court, as a remedy to the aggrieved party. Such a contract is inferred by the court, for the sole purpose of providing justice.

Breach of Implied Contract

In general, implied contracts are legally enforceable; but, it is very difficult to prove the existence of such a contract. As the terms and conditions have to be inferred from the circumstances of the case, and the conduct of the parties, the aggrieved party has to struggle hard to prove an implied contract. ‘Breach’ is a much wider term that includes a violation of law, obligation, or promise. The term ‘breach’ is not restricted to the violation of promises, that are explicitly stated in a contract. So, an implied contract is also enforceable by law.

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