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Beware of implied contracts

On Behalf of | Aug 1, 2022 | Contract Law

Drafting, negotiating and executing various contract is an inherent part of running a business, and Texas business owners deal with contracts every day. Contracts are typically in writing, but as a business owner, you should be aware that there is also something called an implied contract. An implied contract is not in writing.

Implied-in-fact contracts

There are two types of implied contracts. An implied-in-fact contract is formed through the actions of you and the other party. Although your contract may not be in writing, it can be assumed that you have a contract because of your words or behavior.

To give an example that is perhaps oversimplified, if you are a regular customer at a restaurant and always pay your bill after dining there, it is expected that the next time you visit, you will pay your bill.

If you eat your meal but refuse to pay the bill, you cannot justify it by saying you did not sign a contract that you would pay your bill. It is assumed that you will pay your bill, since you always have before and by coming to the restaurant and eating a meal, it is assumed you would do so again.

Implied-in-law contracts

The second type of implied contract is an implied-in-law contract. This is a contract created to serve the interests of justice and fairness.

An example of an implied-in-law contract is if you have a medical emergency in a public place, and a doctor comes over to provide you medical services.

The doctor could send you a bill for the services and you might be legally required to pay it. You received the benefit of the medical services, and it would be fair for the doctor to be compensated for them.

Avoiding an implied contract

As a business owner, finding yourself stuck in an implied contract can cause problems, if you did not intend to enter a contract. The best way to avoid an implied contract is to be clear and explicit with your words and actions. If you do not want or intend for there to be a contract, say so clearly and unambiguously.

Implied contracts often involve many gray areas, and you may have questions about certain situations. Employment attorneys can provide helpful advice.