How Are Implied Contracts Formed

Implied contracts are one of the most common types of contracts that are formed without expressly stating terms and conditions. These are contracts that are formed based on the actions and behaviors of the parties involved. In most cases, implied contracts are formed due to the relationship between the parties, and the actions and behavior that are expected of each party.

In this article, we’ll discuss how implied contracts are formed and the key factors that contribute to the formation of such contracts.

1. Conduct of the parties

One of the essential factors to consider when determining whether an implied contract exists or not is the conduct of the parties involved. The behavior of the parties will show their intention to enter into a contract. A relationship of trust and confidence is created between them, which is a necessary element for the formation of an implied contract. Therefore, the conduct of the parties must be such that it implies a clear intention to be bound by an agreement.

2. Mutual agreement

Although an implied contract does not require express terms and conditions, it still requires mutual agreement between the parties. An implied contract arises when the parties act as though they understand the terms and conditions of the agreement. The mutual agreement can be inferred from the conduct of the parties, including their actions, words, and behavior towards each other.

3. Meeting of the minds

The meeting of the minds is an essential factor in the formation of a contract, whether it is implied or express. The parties must have a mutual understanding of the terms and conditions of the agreement. This means that the parties must have a common understanding of what they are agreeing to, and there must be no misunderstandings between them. If there is a misunderstanding, it can lead to disputes and legal issues in the future.

4. Consideration

Consideration is another essential element in the formation of a contract. Consideration can be anything of value exchanged between the parties, and it is what makes the contract legally binding. Even in an implied contract, there must be consideration for the agreement to be enforceable. Consideration can be a promise to do something, a payment, or anything that is of value to the parties involved.

5. Unilateral and bilateral contracts

There are two types of implied contracts – unilateral and bilateral. A unilateral contract is formed when one party performs an act that the other party knows or reasonably expects will be paid for. A bilateral contract is formed when the parties exchange promises to perform certain acts. In both cases, the terms and conditions are implied, and the parties act as though they are bound by an agreement.

In conclusion, implied contracts are formed when the parties involved act as though they have entered into a contract. The intention to be bound by an agreement must be evident from their behavior and conduct towards each other. The essential factors in the formation of an implied contract include mutual agreement, meeting of the minds, consideration, and unilateral or bilateral contracts. It is essential to understand the formation of implied contracts to ensure that you are legally protected in any agreement you enter into.

Scroll to Top