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Implied Contract - Definition & Advantages of Implied Contract | What is Implied Contract?

Have you ever found yourself in an agreement without explicitly stating it in words or on paper? If so, you may have entered into an implied contract. An implied contract is a type of agreement between two parties that is not expressed verbally or in writing. Instead, it is inferred from the actions, conduct, or circumstances surrounding the agreement. In this blog post, we will delve into the definition and advantages of implied contracts, while also highlighting some considerations to keep in mind. We will also provide examples of situations where an implied contract might come into effect.


Definition of an Implied Contract:

An implied contract is a legally binding agreement that arises from the conduct or actions of the parties involved, rather than being explicitly stated in written or spoken terms. This type of contract can be created through the parties' behaviors, a course of dealing between them, or customary practices within a particular industry or context.


Advantages of Implied Contracts:

Implied contracts offer several advantages for parties involved:

  1. Flexibility and Negotiation: Implied contracts allow for flexibility in negotiation, as they are not constrained by rigidly defined terms and conditions. This flexibility can facilitate creative problem-solving and adaptation to changing circumstances.

  2. Oral and Personal Agreements: Implied contracts can enforce promises made orally or in person. This can be particularly useful in situations where formal written contracts are not practical or feasible, such as informal business transactions or personal arrangements.

  3. Remedies for Breach: When one party fails to fulfill their obligations under an implied contract, the other party has legal recourse. They can sue for breach of contract and seek remedies or damages for the losses incurred.


Disadvantages of Implied Contracts:

While implied contracts can be advantageous, it is important to consider their limitations:

  1. Burden of Proof: Proving the existence of an implied contract in a court of law can be challenging. Since the agreement is not explicitly stated, providing evidence to substantiate its existence may be difficult, especially if one party denies its existence.

  2. Ambiguity and Disputes: The absence of explicitly stated terms and conditions in an implied contract can lead to ambiguity and potential conflicts between the parties. Without clear terms, misunderstandings can arise, potentially resulting in disagreements and legal disputes.

  3. Lack of Written Documentation: Implied contracts are not documented in writing, making it easier for either party to disregard or dispute the agreed-upon terms. This can create a higher risk of contract breaches and difficulties in enforcing the agreement.



Implied contracts play a significant role in various aspects of business and personal relationships. They offer flexibility and allow for oral or personal agreements to be legally enforceable. However, it is crucial to approach implied contracts with caution due to the potential challenges they pose, such as difficulty in proving their existence and ambiguities in terms. Seeking legal advice from an experienced attorney when considering or dealing with implied contracts is advisable to ensure your rights and obligations are adequately protected and represented