Advanced Contracts

Lesson 10: Express vs. Implied Contracts

Welcome to the world of contracts! Let’s dive into express and implied contracts, with a touch of humor to keep things light.

In the realm of contract law, several types of contracts exist, each categorized based on various criteria. One of the primary distinctions is between express and implied contracts. Understanding these differences is crucial for interpreting, drafting, and enforcing contracts.

Express Contracts

An express contract is one where the terms and conditions are explicitly stated, either orally or in writing. Both parties involved clearly articulate their intentions and agree upon the contractual obligations.

Express contracts are the most straightforward contracts as the terms are clear and understandable to all involved parties.

Example of an Express Contract




  
  
  
    John Doe agrees to sell a car to Jane Smith for $10,000.
    Jane Smith agrees to pay $10,000 to John Doe upon delivery of the car.

In this example, John Doe and Jane Smith explicitly state their obligations and the terms of their agreement. There is no ambiguity about what each party is expected to do.

Implied Contracts

Unlike express contracts, implied contracts are formed by the actions, behavior, or circumstances of the parties involved, rather than their explicit words. Implied contracts can be further divided into two categories: implied-in-fact contracts and implied-in-law contracts.

Implied-in-Fact Contracts

An implied-in-fact contract is created by the conduct of the parties. The agreement is inferred from their actions or circumstances, even though no direct agreement was expressed in words.

Implied-in-fact contracts require a mutual intention to contract, which is inferred by the behavior of the parties.

Example of an Implied-in-Fact Contract

In this example, a restaurant orders food from a supplier, and the supplier delivers the food. The restaurant then pays for the delivered food. Although there is no written or verbal agreement, the actions of both parties suggest a mutual agreement.

Implied-in-Law Contracts (Quasi-Contracts)

Implied-in-law contracts, also known as quasi-contracts, are not true contracts but are legal obligations imposed by the court to prevent unjust enrichment of one party at the expense of another. These are not based on the agreement of the parties but are created to promote fairness and justice.

Example of an Implied-in-Law Contract

In this example, if Person A mistakenly delivers goods to Person B, the court may impose an obligation on Person B to pay for or return the goods to prevent unjust enrichment.

Comparing Express and Implied Contracts

Both express and implied contracts are legally binding, but their formation mechanisms differ significantly.

graph TD; A["Express Contracts"] --> B["Explicit terms and conditions"] C["Implied Contracts"] --> D["Inferred from actions or circumstances"] C --> E["Imposed by court to prevent unjust enrichment"]

Key Differences

While both express and implied contracts are recognized and enforceable under the law, their key differences lie in their formation and the clarity of their terms:

Formation: Express contracts are formed through explicit agreement, either written or oral. Implied contracts are formed through the conduct of the parties or by law to prevent unjust enrichment.
Clarity: Express contracts have clear, articulated terms. Implied contracts rely on the actions or circumstances of the parties to infer the terms.

Legal Enforceability

Both express and implied contracts are legally enforceable as long as they meet the essential elements of a contract, which include:

Real-World Application

Understanding the distinctions between express and implied contracts is essential in various real-world applications. Here are a few scenarios where these contracts commonly arise:

Business Transactions: Most commercial agreements are express contracts, clearly outlining the obligations of each party.
Professional Services: Implied-in-fact contracts often occur with professional services, like a visit to a doctor who performs services with the expectation of payment.
Unjust Enrichment Claims: Implied-in-law contracts are frequently used in cases to prevent unjust enrichment, such as when one party benefits unfairly at the expense of another.

Case Study: Implied Contracts in Employment

Implied contracts can also play a significant role in employment relationships. For example, an implied-in-fact contract may arise when an employer’s conduct suggests certain promises or expectations, such as job security or raises based on performance. Courts may recognize these implied agreements even if there is no written contract.

Illustrative Example

Consider the following flowchart illustrating the formation of an implied-in-fact contract in an employment context:

graph TD; E[Employee starts working at Company] --> F[Company provides wages and benefits] F --> G[Employee continues to perform job duties] G --> H[Implied-in-Fact Contract: Mutual understanding of employment terms]

Practical Tips

To avoid disputes, it's always better to document agreements clearly whenever possible. Even if you believe an implied contract exists, having written evidence can provide clarity and prevent misunderstandings.