Implied in fact contract

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An implied-in-fact contract (also, "contract implied-in-fact" or simply, "implied contract") refers to a contract agreed by non-verbal conduct, rather than by explicit words. Such contracts are formed when one party accepts something of value knowing that the other party expects compensation. For example by visiting a doctor, a patient agrees to pay a fair price for the service. If he refuses to pay after being examined, he has breached a contract implied in fact.

Generally, an implied contract has the same legal force as an express contract. However, it may be more difficult to prove the existence and terms of an implied contract should a dispute arise. In some juristictions, contracts involving real estate may not be created on an implied-in-fact basis.

Many businesses are based on implied-in-fact contracts not covered by law, but by mutual interest of the parties. Take as an example, the variable rates of interest on mortgage loans: there may be no formal agreement by the lender not to raise rates substantially, however rates are not raised normally as it is in their interest to maintain competitive interest rates (particularly if the borrower has the ability to refinance).