What is a Contract?
A contract is a formal agreement between two different parties or entities (such as a company). In the contract, one party agrees to provide a service or supply goods in exchange for some form of compensation, which can be money, goods, or other services.
What is an Implied Contract?
An implied contract is a contract that exists because the parties assumed a contract exists, or if it were present, it would be unfair to one of the parties. It has legal force due to the actions of the parties and the circumstances.
Are Implied Contracts Legal?
When we talk about legal contracts, we mean that the contract is valid and legally binding on both parties. In addition to the meeting of the minds, three other elements must be present for a contract to be valid: both parties must be capable of making decisions (they must not be minors or under the influence of drugs or alcohol or have mental incapacity), the contract must not be for something illegal like drugs or prostitution, and there must be consideration (something of value) being offered by both parties. If one party provides something only, that is a gift and not a contract.
How Can I Avoid Implied Contracts?
The best way to avoid implied contracts is to be aware that an implied contract may exist and to be explicit in your actions when dealing with others in business and personal situations. After mowing the lawn for the second time, you could ask your neighbor by saying: “I really appreciate this. But you know I didn’t ask you to do that. I am not hiring you to mow the lawn.”
How Can I Avoid Implied Contracts with Employees?
Implied contracts sometimes arise in employment situations. You do not want to imply that an employee has any type of employment contract with you because that opens the door to all sorts of issues. When making job offers, make sure you explain that employment is “at-will.” This means either party can terminate the relationship at any time. In writing the policy manual, avoid implying a contract. For example, do not say “when your probationary period ends.” This sounds like a promise that the person will be able to stay for the entire probationary period and that they have a permanent job. Instead, say “if you successfully complete the probationary period.”
Sources:
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Source: The Florida Bar. “Consumer Pamphlet: Legal and Binding Contracts.” Accessed June 26, 2020.
Cornell Legal Information Institute. “Implied Contract.” Accessed June 29, 2020.
Cornell Legal Information Institute. “Contract Implied in Fact.” Accessed June 27, 2020.
Cornell Legal Information Institute. “Contract Implied in Law.” Accessed June 27, 2020.
Sam Houston State University. “Contracts: Basic Principles 430x.” Accessed June 27, 2020.
Cornell Legal Information Institute. “Employment-at-will Doctrine.” Accessed June 27, 2020.
Source: https://www.thebalancemoney.com/implied-contracts-and-how-to-avoid-being-caught-in-one-4043246
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