Businesses rely on those they work with to keep their promises. This can become more challenging, however, when they do not get their agreements in writing. What should you know about implied contracts?
What is an implied contract?
Unlike written contracts, an implied contract is an agreement inferred from the actions, behavior or circumstances involved rather than a written document. Implied contracts can either be implied-in-fact or implied-in-law.
Implied-in-fact contracts arise from the mutual agreement and intent to promise, with the conduct of both parties implying their agreement. For example, courts have found that businesses may have an implied contract with their employees based on the terms in their employee manual.
Implied-in-law contracts are obligations imposed by law to ensure fairness, whether or not there was an agreement in place. For instance, a business might unjustly receive a benefit to which they were not entitled. In this case, they may have to pay for it, even though there was no explicit agreement to do so.
What is a breach of implied contract?
A breach of an implied contract occurs when one party fails to fulfill their obligations under the terms inferred by their agreement or conduct. This could look like:
- Failing to pay for goods or services that the other party delivered, even though ongoing business practices had established an expectation of payment.
- Not providing services or goods that the other party expected as part of a regular business interaction, without proper communication or termination of the agreement.
What can you do If someone breaches an implied contract?
Because of the challenges that can arise from implied contracts, it is important for businesses to take steps to protect themselves. You should always communicate clearly and document interactions and agreements when possible. This helps establish explicit expectations instead of relying on implied terms. This documentation can also serve as evidence of the terms of your agreement.
When issues arise, Kansas law generally allows you to hold others responsible for their broken promises. In a situation where someone breached an implied contract, you may be able to file a lawsuit and receive compensation to cover the losses caused by the breach.
For Kansas business owners, it is crucial to understand what a breach of implied contract is. This knowledge helps you manage your business relationships and reduce legal risks. By knowing how implied contracts form and actively making terms clear, you protect your business and build stronger, more dependable relationships.