Implied contract

An implied contract is a legal agreement which exists when the circumstances to deny the implied contract would result in the unfair treatment or enrichment of one of the members of the contract. The implied contract exists in the absence of an oral or written agreement.

A common type of implied contract is one that exists when a customer purchases a product. For example, if a customer purchases a blender there is an implied contract or warranty that the product will work and perform its intended purpose; in this case blend food.

Another example of an implied contract exists when a doctor agrees to treat a patient. The doctor performs their best work, and the patient pays them for their services. The implied doctor/patient implied contract exists when the parties are acting under an assumed agreement to perform actions which have historically been performed under this type of arrangement.

Breach of an Implied Contract

A breach of an implied contract can exist if the offender's actions do not meet the expectations of the other party, even if the actions were not explicitly identified within a contract. For example, as noted above, even if there is not a written contract that a blender will blend, if the purchased blender fails to perform its primary function, as expected by the buyer, the implied contract has been breached.

Another common breach of implied contracts is a breach of an employment contract. For example, an employment contract can be breached if an employer breaks the implied, non-written contract of an employee. In general, an implied contract exists if both the employer and employee have a "mutual understanding of expectations." Proving this, however, can be difficult. Other breaches of an implied contract can include violations of law, obligations, or principals.

Elements of an Implied Contract

Common elements which may exist for an implied employment contract include lengthy service record, performance evaluations which have been positive, consistent promotions, salary increases, and bonuses paid. Other evidence can include information which clearly states when an employee can be terminated.

If an employer fires an at-will employee and there is not good cause for the termination, the employee may be able to seek legal recourse, arguing the employer did not abide by the terms of the implied or oral contract. Unfortunately, proving an implied contract exists is much more complicated than challenging disputes from a legal contract.

Additionally, it is not unusual for employers to ask employees to sign a contract agreement which can nullify much of the evidence needed to challenge a breach of implied contract. For example, the agreement may notify the employee that mission statements, handbooks, employee policies and other materials does not constitute an implied contract.