Understanding Implied-in-Fact Contracts: Key Elements Explained

Implied-in-Fact Contract

An “Implied-in-Fact Contract” refers to a contractual agreement that arises not from explicit written or verbal expressions but from the conduct, actions, or situational context of the involved parties, which collectively suggest a mutual intent to agree. This type of contract is deduced from the circumstances that demonstrate an unspoken understanding and agreement between the parties.

Elements of an Implied-in-Fact Contract

• Offer and Acceptance: The behaviors or situational context must clearly indicate that one party has extended an offer, which the other party has subsequently accepted.
• Consideration: There must be an exchange of value between the parties, which can be in various forms, not limited to monetary compensation.
• Mutual Intent to be Bound: The involved parties, through their conduct or the prevailing circumstances, must manifest an intention to be bound by the agreement.
• Capacity: The parties must possess the legal capacity to form a contract, which includes being of a certain age and having the mental capability to understand the agreement.

Example

An example of an implied-in-fact contract could be when a grass cutter goes down a street mowing lawns and each homeowner comes out and pays at the end. When the grass cutter arrives at the last house, the homeowner who is sitting on the porch and has noticed the other homeowners receiving services, smiles and waves to the grass cutter, who then proceeds to mow the lawn with no protest from the homeowner.

Afterward, the homeowner is obligated to pay because it was obvious the grass cutter was offering to do services for pay (especially since the other homeowners were receiving the service and paying), and it would be unfair to expect the homeowner not to pay simply because there was no formal contract for services.

Legal Framework

The concept of implied-in-fact contracts is acknowledged within the legal framework of California, embedded within the broader principles of contract law.

Disclaimer

The content of this blog is intended solely for informational purposes and does not constitute legal advice. Legal issues are complex and individual; as such, if you seek guidance on a specific legal concern, please consult with a licensed attorney. Contact A.E.I. Law, P.C. at (888)-423-4529 for personalized legal counsel.