Also known as: implied-in-law · quasi-contract
Written by attorneys · grounded in primary & secondary sources — see below
A contract term supplied by operation of law rather than by the parties' agreement or factual inference. Courts insert these terms to fill gaps when the parties have not addressed a matter, ensuring the contract receives a reasonable construction under background legal rules.
Ilana and Ike became engaged and Ilana quit her job to manage Ike's company full time while using her savings to pay off a company loan. Ike later called off the wedding. A court awards Ilana actual damages for her career change and expenditures because the retained breach-of-promise action treats those losses as recoverable under the quasi-contract component supplied by law.
Ines purchased a new car from Imperial Motors. The car developed steering defects shortly after delivery. A court holds that an implied warranty of merchantability attached by law to the sale even though the purchase order mentioned only a limited express warranty, allowing Ines to recover for the manufacturer's breach.
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Imani conveyed ranch property to her sister Isabelle by deed that said nothing about a right to return for family events. Isabelle later objected when Imani sought to use the land. The court admits evidence of an implied reservation because the law supplies a reasonable time or manner term when the writing is silent on the point.
Ibrahim reported suspected illegal activity at Iris Energy to his supervisor. The company terminated him two weeks later. A court recognizes that the implied covenant of good faith and fair dealing supplied by law prevents an employer from discharging an at-will employee for reasons that frustrate the contract's purpose.
Integrity Partners was sued for a covered loss exceeding policy limits. Traders & General refused to settle within limits despite a reasonable opportunity. The court imposes liability for the excess judgment because an implied covenant of good faith and fair dealing supplied by law requires the insurer to protect the insured's interests.
Ike and Ines lived together for years, pooled earnings, and titled property in both names while each performed household and business services. After separation Ike claimed sole ownership. The court imposes an implied agreement or constructive trust supplied by law to prevent unjust enrichment and to recognize the parties' joint contributions.
A term implied by law is supplied by legal rule when the parties have left a gap, regardless of their actual intent. A term implied in fact rests on the parties' actual but unstated understanding inferred from their conduct and circumstances.
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A court will not supply a term when the parties have expressly addressed the matter or when doing so would contradict their manifested intent. The supplied term must also be consistent with the contract's overall purpose and commercial reasonableness.
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No. A term supplied by law is part of the contract even if the writing appears complete on its face. Courts therefore consider such terms when deciding integration and the scope of the parol evidence rule.
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…affirmed a rescission judgment saying: “It must be borne in mind that the warranty of fitness for a particular use, which is implied by law where a manufacturer sells machinery for a purpose made known to him by the buyer thereof, relying on the skill and judgment of the manufacturer in selecting machinery adapted thereto, is a…