An implied agreement, also called an implied contract, is a part of every type of contract or agreement made. Whenever an agreement or contract is made, certain things regarding the product or service are implied, but are not necessarily written. For example, when a toaster is purchased, it is implied to the buyer that the toaster will be in normal working condition.
The first element of an implied agreement is an initial contract. For something to be implied in an agreement, a contract or agreement is created between two parties. The contract states certain terms. However, other issues are commonly implied. An implied agreement cannot take place without the use of some other type of agreement regarding a good or service.
Good Faith and Fair Dealing
An implied agreement is never written. However, when one party purchases something from another party, the purchaser always assumes certain details. These typically involve good faith and fair dealing issues. This element of implied agreement protects against parties who sell things with the knowledge that the items or services are not in proper functioning order. For example, when a person purchases a computer, the person assumes, through an implied agreement, that the computer will turn on and function properly.
Breach of Implied Covenant
A breach of implied covenant occurs when the seller refuses to cooperate with an issue that is implied. If a person purchases a DVD player that does not turn on, the seller or manufacturer must replace it or fix it. If he refuses, a breach of an implied agreement occurs.
Another element of an implied agreement is that the seller of a good or service must pay for all costs involved in replacing or fixing an item not functioning as it should. With an implied agreement, the item must work properly or the seller must compensate the buyer by fixing it or replacing it. If the seller refuses to, he again breaches an implied part of the agreement.
With implied agreements, there is an exception. If an item is sold "As Is," there is no implied agreement to the sale. The buyer receives the good just as it is and has no recourse if the item is not functioning properly.