Contracts are usually based on words, either written or spoken. Such contracts are “express contracts”; i.e., the terms of such contracts are expressed by words, and from those words, the Court can review the parties’ contractual obligations. But not everyone is good at expressing themselves verbally, and not every agreement is reduced to words.
Taking a page from the adage, “actions speak louder than words,” the law provides that a contract can be found to have been reached based upon conduct not words. Such contracts are known as “implied” contracts.
The law provides for two types of implied contracts: First, when the parties agreement can truly be implied from their actions, the Court may find an agreement implied in fact. Second, when the policy of the law is such that to achieve justice under the circumstances of the case, an agreement should be implied, the Court may imply an agreement in law.
Example of Implied Contracts
Assume Joe tells Jim he needs money. Joe gives Jim $1,000 and says “I expect repayment.” Jim doesn’t agree to repay the money but takes the $1,000. A year later Joe asks Jim for the $1,000 and Jim says, “I never promised to repay you. You just gave me that money!”
Here, the law would imply a promise to repay the money. When Jim took the money, he knew Joe expected it to be repaid. Jim would be liable to Joe on an agreement implied in fact.
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