What Is an Inferred Contract

An inferred contract, also referred to as an implied contract, is a legally binding agreement that is derived from the circumstances and actions of two or more parties. Unlike an explicit contract, an inferred contract is not formed through written or verbal communication, but rather through the inferred understanding and conduct of the parties involved.

Inferred contracts can arise in a variety of situations and can apply to various types of agreements, such as employment contracts, service contracts, and lease agreements. The most common example of an inferred contract is the employer-employee relationship, where the terms of employment are implied through the actions and expectations of both the employer and employee.

In order for an inferred contract to be enforceable, it must meet certain requirements. Firstly, there must be a mutual understanding between the parties involved that an agreement has been made and that certain terms apply. Secondly, both parties must have acted in a way that is consistent with the terms of the inferred contract. This may include conducting business, exchanging services, or making payments.

In some cases, an inferred contract may be created unintentionally. For example, if a landlord accepts rent payments from a tenant for several months without objection, it may be inferred that there is an agreement that the tenant will have a right to occupy the property for a certain period of time.

It is important to note that inferred contracts may not be applicable in all situations. In some cases, explicit contracts may be necessary to clarify the terms of an agreement to avoid misunderstandings and potential disputes. Additionally, inferred contracts may be difficult to enforce in court, as the terms are not explicitly defined.

In conclusion, inferred contracts are legally binding agreements that are established through the actions and understanding of two or more parties. While they may be applicable in some situations, it is important to consult with legal professionals and ensure that the terms of an inferred contract are clear and enforceable.