What Is an Implied in Fact Contract

An implied in fact contract, also known as an implied contract, is a binding agreement between two parties that is not expressed in writing or spoken communication. Instead, the agreement is inferred based on the actions and behavior of the parties involved. This type of contract is legally enforceable and holds the same weight as a written contract.

Implied in fact contracts arise when there is an expectation that one party will perform a certain task or provide goods or services in exchange for payment or other compensation. This expectation can be inferred from the circumstances surrounding the agreement, such as the parties` conduct, past business dealings, or industry customs.

For example, if a contractor starts work on a homeowner`s renovation project without a written contract but the homeowner continues to pay for the work and communicates expectations for the final product, an implied in fact contract may arise. The contractor can sue for payment if the homeowner fails to pay as agreed.

Implied in fact contracts are often seen in employment relationships, where the terms and conditions of the job are not spelled out in a written contract but are understood based on industry practices and the actions of the employer and employee. If an employee is terminated without cause and the employer fails to pay them the agreed-upon severance package, the employee may have a case for breach of an implied in fact contract.

It`s important to note that there are limitations to implied in fact contracts. They must meet certain criteria, including mutual assent, consideration, and performance, to be considered legally binding. Additionally, some jurisdictions may require that the parties intended for their actions to create a contract.

In conclusion, an implied in fact contract is a legally binding agreement that arises from the actions and behavior of the parties involved. These contracts are common in employment relationships and can be enforced in court. While they`re not written down, they hold the same weight as a written contract and are subject to the same legal requirements.