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What is an Implied Contract?

Contracts are agreements between people and/or entities. As long as they don’t break some specific rules, such as everyone involved being 18 years or older, they are legally binding and enforceable by law. For something to be implied, it is suggested but not explicitly said. Knowing this, what is an implied contract?

If people or entities act in such a way in accordance with an unspoken or unwritten agreement, it is an implied contract, and legally binding. Here’s the issue, without a spoken or written agreement, how does anyone know for sure that everyone is acting in accordance with any sort of agreement?

This issue leads to a lot of legal confusion and disagreements surrounding implied contracts. The attorneys at Bantle & Levy can explain what implied contracts are, how they work, and if you have one that is enforceable.

How Do You Enter an Implied Contract?

For there to be an implied contract, certain things must be true. First, no person or entity is receiving unjust benefits at the expense of another. Second, there is no verbal or written agreement between both parties.

If these things are true, then there must then be a reason for someone to expect something from another without it being spoken. A common and easily enforceable implied contract is an implied warranty. Someone sells their product under the unspoken expectation that it will work without breaking for a certain amount of time.

When a product breaks en masse or quickly after it was purchased, this is a violation of an unspoken contract. For longer warranties, companies offer spoken deals since they can’t actually promise long-term usability.

Are Implied Contracts Enforceable?

While they have legal backing, they are incredibly difficult to enforce and prove in most instances. Implied contracts that you may have between you and your employer would be incredibly difficult to prove both ways.

Many are convinced that they will be offered a job if they do well at the end of an internship, but this is an implied contract that would be incredibly difficult to prove. On the other hand, if multiple people receive long-term employment after their internships with what feels like implied contracts, except for one person, you may have a better argument. You have examples – and also potential proof of discrimination – if you’re the only one left out.

To determine if your implied contract is enforceable, you need to be able to identify what both parties are receiving, that they are near-equal, and how it was implied. In many cases, you and your attorneys would also need to prove that the time allocated for the opposing side to complete their end of the contract has been reached.

If you are the one being accused of not completing your contract, you may only need to disprove one of these aspects of the potential implied contact. This is what helps to make implied contracts so difficult to prove.

The Two Types of Implied Contracts

There are only two types of implied contracts. They are implied-in-fact and implied-in-law.

Implied-in-fact contracts are made when two parties have duties to perform as if they have a contract. This contract assumes that both parties know and understand the terms of the agreement and what they have to do to complete it. Say two businesses were operating under an expired contract. While there is no contract bonding them, they have reason to believe that the other knows what they need to do to continue the partnership.

Implied-by-law contracts have nothing to do with intent. If laws require that actions, products, and/or services meet a certain standard in exchange for another, then both parties have a responsibility to abide by it. For instance, certain products have to reach a safety standard. When they are sold to stores and/or customers, the sellers are agreeing that the product will meet those safety standards while the store and/or customer gives them money. If the product doesn’t meet the implied safety standards or the store doesn’t pay the agreed-upon price, an implied contract has likely been broken.

Implied Contracts in Employment

You’re likely to feel like you’ve been offered employment or promotion through an implied contract. This is where most implied contacts appear in employment.

Your potential or current employer will seemingly offer or suggest a job offer or promotion if you complete some arbitrary task or goal. When they don’t offer it to you, this can, in some cases, be a breach of implied contract, but not always. Another common example is an employer giving reason for an employee to believe their position is safe when it is not.

Common ways that employers and employees accidentally enter into implied contracts include:

  • Employee handbooks: It’s not uncommon for employee handbooks to explain business practices and expectations. These practices can include the company’s termination, firing, and hiring processes. For example, if an employee handbook says that first offenses are met with verbal warnings, the employee and employer have entered into an implied contract that the employee will receive a verbal warning for their first offense. At-will employment does not supersede this implied contract.
  • Performance reviews: If an employer gives you praise and in any way implies that you will keep your job and/or even see promotions or raises based on your performance, you may have entered into an implied contract.
  • Offers of employment: During job interviews and internships, employers may hint that people will receive a job at the end of the process, or at least move on to the next stage of the hiring process. This can be seen as an implied contract between the employer and the employee.

Contact Bantle & Levy For Help With an Implied Contract

Implied contracts can become complicated, especially compared to their written and spoken counterparts. If you have been promised something or were accused of promising something that didn’t happen, you need to consult with an attorney. Breaking a contract is a serious thing that can cost someone significantly. Our attorneys can help. Contact us as soon as possible.

Bantle & Levy

Lee Bantle is a partner at Bantle & Levy LLP. He has extensive legal expertise, admitted to the bars of the U.S. District Court and the U.S. Court of Appeals. With a distinguished academic background and clerkship experience, he has been recognized as a top-rated civil rights attorney and esteemed lawyer. In addition to his successful career, he has actively contributed to various legal organizations and serves as a faculty member for NYU's Annual Workshop on Employment Law for Federal Judges.

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