Also known as:implied undertakings · implied promise
Written by attorneys · grounded in primary & secondary sources — see below
An implied promise arising from the facts and circumstances of a transaction without any express statement. The promise receives the same treatment as an express promise when determining enforcement rights and the allocation of burdens or benefits after a transfer of interests.
Sources & Authorities
How it applies
Common Examples
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Landlord Waste Compliance Obligation
East Industries leased a production facility to Elm Precision and for seven years coordinated waste pickup and regulatory filings even though the lease was silent on the topic. East sold the building to Sky Plastics. Sky continued the same services for four months before stopping. Elm sued Sky to enforce the continuing duty. The court treated the longstanding practice as creating an implied undertaking that bound the successor landlord in the same manner as an express covenant.
Exclusive Endorsement Agency Duties
Lucy granted Wood the exclusive right to market her designs for one year. Wood invested time and resources in the arrangement without any written promise from Lucy to use reasonable efforts. When Lucy began placing her own endorsements, Wood sued for breach. The court found an implied undertaking by Lucy to refrain from self-marketing that arose from the grant of exclusivity and the surrounding circumstances.
Select any source to read its text and confirm it supports the definition.
Restatements
Casebooks
Wood v. Lucy, Lady Duff-Gordon222 N.Y. 88, 118 N.E. 214 (1917)
Distribution Agreement Assignment
Nexxus granted Sally Beauty an exclusive distribution contract. Sally Beauty later assigned its rights to a competitor without Nexxus consent. Nexxus refused to continue supplying the assignee. Sally Beauty sued claiming the assignment carried an implied undertaking to maintain performance standards. The court examined whether the assignment altered the nature of the performance Nexxus had bargained for under the original arrangement.
Sally Beauty Co. v. Nexxus Products Co.801 F.2d 1001 (1986)
Employment Termination Context
Interactive Data hired Foley under an agreement that contained no express promise regarding continued employment. Foley alleged that company statements and practices created an implied undertaking not to terminate without cause. When Foley was fired after reporting misconduct, he sued for breach. The court analyzed whether the surrounding facts and conduct gave rise to an enforceable implied undertaking limiting termination rights.
Foley v. Interactive Data Corp.47 Cal. 3d 654, 254 Cal. Rptr. 211, 765 P.2d 373
Third Party Beneficiary Will Provision
Mrs. Beman devised property to her husband on the condition that he pay a sum to her niece. The will contained no express promise by the husband to the niece. After the husband accepted the devise but refused payment, the niece sued. The court held that the facts surrounding the devise created an implied undertaking enforceable by the intended beneficiary.
Seaver v. Ransom224 N.Y. 233, 120 N.E. 639 (1918)
Vehicle Design Fitness Claim
Ford sold a Bronco II marketed for both off-road and everyday driving. Denny purchased the vehicle and later suffered a rollover on a paved road. Denny sued alleging the vehicle was unfit for ordinary highway use. The court considered whether the marketing and design created an implied undertaking regarding fitness for the ordinary purposes for which the vehicle was sold.
Denny v. Ford Motor Co.87 N.Y.2d 248, 639 N.Y.S.2d 250, 662 N.E.2d 730, 736 (1995)
Common questions
Frequently Asked
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How does an implied undertaking arise in a lease transaction?+
An implied undertaking arises when the facts and circumstances of the lease transaction demonstrate that the parties understood a particular obligation to be part of their bargain even though the lease document contains no express promise on the subject. The Restatement treats that implied undertaking identically to an express promise when determining whether the burden or benefit passes to a successor in interest.
Supporting sources
Does an implied undertaking require a writing to be enforceable?+
No. An implied undertaking is inferred from conduct and surrounding circumstances rather than from any written statement. Courts enforce it on the same terms as an express promise once the facts establish that the parties reasonably understood the obligation to be part of the transaction.
Supporting sources
What happens to an implied undertaking after a transfer of the leased property?+
The burden and benefit of an implied undertaking pass to the transferee in the same manner as an express promise. The Restatement directs courts to allocate the obligation after transfer in the way that best furthers the purposes for which the obligation was originally imposed.
Supporting sources
Can an implied undertaking be created by beginning performance under an offer?+
Yes. When an offer invites acceptance by beginning performance, the offeree's commencement of the invited work both forms the contract and carries with it an implied undertaking to complete the performance. The law treats the resulting agreement as bilateral with a duty to finish.
Supporting sources
222 N.Y. 88, 118 N.E. 214 (1917)Contracts
…of all the profits resulting from the plaintiff’s efforts. Unless he gave his efforts, she could never get anything. Without an implied promise, the transaction cannot have such business “efficacy as both parties must have intended that at all events it should have” (Bowen, L. J., in The Moorcock , 14 P. D. 64, 68). But the…