An implied contract exists when two or more parties do not have a written contract in place, but there is a legal obligation based on the circumstances to uphold fairness for each party. While it’s typically a good idea to get any important contracts in writing, there are situations in which implied contracts are legally binding.
There are basically two types of these contracts: implied in-fact contracts and implied at-law contracts.
Implied in-fact contracts
A contract that is implied in fact establishes an obligation between all parties to the contract based on the situation’s facts. If parties conduct themselves in a way that suggests they had reached an agreement or understanding, the law generally states that there was an implied in-fact contract in place.
For example, imagine you are hired by someone to do some weekly landscaping and gardening work every Saturday, and are paid upon completion of each week’s work. You perform the job for five weeks in a row without incident, but on the sixth week, the person who hired you refuses to pay. Even if your agreement with this person was not in writing, a court would likely find that the person who hired you acted as though there was an agreement in place and that he or she did not live up to that implied in-fact contract.
Implied at-law contracts
In an implied at-law contract, there is a duty for the parties involved to perform certain duties, even if it’s against one of the party’s will. Without this duty, one party would be unfairly impacted by the actions of another party. In such a scenario, one party would be entitled to restitution for his or her losses, even if there was not an intent to enter a contract by either party.
This can get quite complicated. As an example, imagine a person gets into a car accident and suffers a broken bone, and then another person arrives at the scene to call an ambulance and help the injured party to safety. Later, that person is billed for their medical expenses, but they refuse to pay, having never intended to need medical treatment to start. The person is obligated to pay, however, because otherwise he or she would have unfairly benefited from the hospital’s services. The law determines there is an implied at-law contract in place between the patient and the hospital.
In short, just because a contract is not written down does not mean it is not legally enforceable. Even verbal contracts can be considered legally binding in some circumstances.
Regardless, it is always a good idea to get a contract in writing. For more information and guidance on establishing and enforcing sound business contracts, speak with an experienced business law attorney in the U.S. Virgin Islands.
Tobi A. Russeck is an attorney in the Litigation Practice Group at BoltNagi PC, a widely respected and established civil litigation law firm serving clients throughout the U.S. Virgin Islands.