Distinguishing between expressed and implied contracts

Distinguishing between expressed and implied contracts

| Jan 8, 2020 | Firm News |

Many business owners in Florida run their companies without ever signing on a dotted line. Some may not even iron out contract details verbally. Instead, they operate on an understanding developed between themselves and a second party over time. This might work for the entire lifetime of a business without causing problems, but it is risky. If one person changes their mind about following through or someone else takes over the business, it can put the other person in a difficult position. 

According to Cornell Law School, for a contract to be considered an express contract, it must be written or oral. An expressed contract articulates a trading of promises from both sides, to which both are bound. In most instances, the contract should also meet the following requirements: 

  • Includes a definite offer 
  • Involves unconditional acceptance 
  • Expresses the intent in a way that all involved parties understand it 
  • Allows time for consideration 

In contrast, a contract-implied-in-fact may involve no oral or written agreement. Instead, the conduct of the parties involved and the circumstances surrounding their actions help determine if the contract is implied. This may occur, for instance, when two companies pitch in 50/50 on the cost of expensive equipment. The equal share in cost might imply the equal share in the use of the equipment, even if this is not explicitly stated. 

Most professionals agree that having a written agreement serves as the most solid option for contracts. The Florida Bar also reminds business owners that some agreements are only enforceable in the state if they are in writing. Some of these contracts involve those related to real estate sales. However, verbal agreements where one party already carried out their end of the deal often have a high chance of enforceability.