Contract Implied by Action: What It Is and Why It Matters
In the realm of contract law, a contract implied by action refers to a legally binding agreement that is inferred from the parties` conduct rather than explicitly stated in writing or verbally agreed upon. Simply put, it is a contract that is formed through the actions and behavior of the parties involved, rather than through a formal agreement.
How does this work in practice? Let`s say you hire a contractor to paint your house. You discuss the project and agree on a price, but you don`t sign a written contract. However, the contractor proceeds to do the work, and you make payments for the work as it is completed. In this scenario, a contract is implied by your actions. Even though you didn`t sign a formal agreement, your behavior – paying for the work and allowing the contractor to proceed – indicates that you have entered into a legally binding agreement.
In order for a contract implied by action to be enforceable, there are several key elements that must be present:
1. Mutual understanding: Both parties must have a clear understanding of the terms and obligations of the agreement, even if those terms are not explicitly stated.
2. Conduct indicating agreement: The behavior of both parties must indicate that they have mutually agreed to the terms of the agreement. This can include things like making payments, performing services, or accepting goods.
3. Reliance: Both parties must rely on the agreement to some degree. For example, if the contractor in the above scenario had completed the work without any expectation of payment, there would be no contract implied by action.
Why does this matter? In some cases, a contract implied by action may be the only proof of an agreement between parties. For example, if you are in a dispute with a vendor who claims that you agreed to a certain price or terms but did not put it in writing, a contract implied by action may be the only way to prove that an agreement existed.
It`s worth noting that a contract implied by action is not always the best way to approach a business relationship. In general, it is always advisable to put agreements in writing in order to avoid misunderstandings and disputes down the line. However, if circumstances prevent a written contract from being executed, a contract implied by action may be a viable alternative.
In conclusion, a contract implied by action is a legal agreement that is inferred from the actions and behavior of the parties involved. While it may be a useful tool in certain situations, it is always best to have written agreements in place whenever possible in order to avoid misunderstandings and protect yourself legally.