The Hidden Promise – How the Law Imposes Contracts Through Conduct
INTERVIEW ON THE PRICE OF BUSINESS SHOW, MEDIA PARTNER OF THIS SITE.
Recently Kevin Price, Host of the nationally syndicated Price of Business Show, interviewed Alexander Paykin.
The Alexander Paykin Commentaries
Imagine two parties working together for years without ever signing a formal agreement. One provides services, the other pays periodically, and both benefit from the relationship. Then one day, payment stops, and the paying party insists there was “no contract.” To the untrained eye, that may appear true—no signed document, no express promise. But to the law, such an argument often rings hollow. In many cases, the court will find that a contract existed all along, not by explicit words but by the implied understanding reflected in the parties’ conduct.
This is the realm of implied contracts, where the law bridges the gap between strict formalism and practical fairness. The idea is centuries old and rooted in equity: if people act like they have an agreement, they should be held to it. A contract, after all, is nothing more than an exchange of promises—whether spoken, written, or demonstrated through consistent behavior.
An implied-in-fact contract arises when conduct, rather than words, reveals mutual intent to form an agreement. For example, when a vendor repeatedly delivers goods that the buyer accepts and pays for, each new transaction implies a continuing contract governed by the same basic terms. The court infers an agreement not because of any explicit statement, but because both parties behaved as though one existed. Such contracts rest on mutuality, performance, and acceptance—the same foundational principles that underlie all binding agreements.
By contrast, an implied-in-law contract (or quasi-contract) exists where there was no true agreement at all, but equity demands that one party compensate another to prevent unjust enrichment. Suppose a homeowner mistakenly receives and keeps the benefit of repair work intended for a neighbor. Even though the homeowner never requested the service, a court may require payment to the contractor to avoid an unfair windfall. Here, the law “imposes” a contract to achieve a just outcome.
Closely related doctrines expand this equitable framework. The doctrine of promissory estoppel enforces promises that induce reasonable reliance, ensuring that one party’s detrimental reliance is not left uncompensated. A common example arises in business or employment contexts, where a promise of partnership or investment causes the other party to take costly steps in anticipation. Even if a formal agreement never materializes, the promisor may still be liable for the losses caused by reliance. Partial performance operates similarly, allowing enforcement of agreements that might otherwise fail for lack of a writing when one party’s actions unmistakably point to the existence of a contract. Equitable estoppel likewise prevents a party from backtracking on representations that led another to act to their detriment.
What ties these doctrines together is the law’s refusal to let technicalities override fairness. They reflect the principle that equity looks to substance, not form. A contract is not defined solely by ink and paper, but by the mutual expectations and behaviors of those involved. In this sense, the law functions as both a shield and a sword: protecting individuals who relied in good faith and ensuring that opportunistic parties cannot exploit the absence of formality.
Implied contract disputes frequently arise in industries where informal arrangements are common—creative services, consulting, family businesses, and real estate ventures, to name a few. They also appear in everyday contexts, from a mechanic who performs repairs at a customer’s request to a neighbor who agrees to maintain another’s property in exchange for reimbursement. In each case, the court’s task is to discern whether fairness and the parties’ conduct justify imposing contractual duties.
At the heart of implied contract jurisprudence lies a moral intuition: those who benefit from the acts or reliance of others should not escape accountability by hiding behind silence. This is why courts continue to uphold implied obligations even in our hyper-documented, digital age. Emails, text messages, or even consistent patterns of payment can evidence the existence of an agreement. The lesson for individuals and businesses is clear—be explicit about expectations, or risk having the law fill in the blanks for you.
Ultimately, the doctrine of implied contracts embodies the balance between legal certainty and equitable justice. It reminds us that while the law values precision, it also values fairness—and that the courts stand ready to ensure one cannot unfairly profit from another’s trust.
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