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What Is an Implied Contract?

An implied contract involves the express behavior of a party making a promise of goods or services in exchange for goods, services, or compensation in a promise expressed in the behavior of the other party involved in the agreement. Because an implied contract is only expressed in behavior and sometimes in words, it is not necessarily formalized into a written contract.

When a court encounters an implied contract, it cannot rely on a written contract as evidence of the agreement entered into by the involved parties. However, it can still pass judgment on matters involving implied contracts to avoid any kind of civil infraction or injustice. In order to do so, the court evaluates the behavior of both parties, one that accepts the promise made by the other party that delivers or fails to deliver such a promise. An implied contract can be evaluated by the manner in which the parties conducted their business despite lacking any terms or conditions that either party may have stipulated. Thus, the party who does not fulfill his or her promise is liable for a breach of contract.

Implied contracts are rooted in the principle of equity. An individual who benefits from an agreement made to him by another party must reciprocate in the manner that was agreed upon and is expected by the other party. Even if an agreement was done through silent assent or by other means of agreement other than the traditional verbal manner, it is still considered to be binding under the rule of an implied contract.

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