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Identifying the roots of disputes in implied contracts

On Behalf of | Nov 9, 2023 | Business Law |

Implied contracts, though not formal, are a significant source of disputes in business dealings. These agreements are rooted in actions or circumstances rather than explicit, written terms. For instance, when a company consistently orders goods from a supplier, an implied contract may come into play. The challenge lies in the differing interpretations of these implicit agreements, which often lead to disputes.

Unclear terms: The breeding ground for disagreements

Implied contracts are less clear than written ones, which can lead to confusion. People involved may have different ideas about what they should do, and this lack of clarity can cause arguments.

Think about a company that regularly orders construction materials from a specific supplier. As time goes by, the company may start expecting on-time deliveries, thinking that their loyal and frequent orders mean they are a top priority for the supplier. However, without clear communication, the supplier might view the company as just one of many clients and does not give their orders special treatment. This difference in perception can lead to conflicts.

Changing circumstances: Evolution of business relationship

Business relationships, like any other aspect of commerce, evolve over time. What may have been implicitly agreed upon initially might not hold true as circumstances change. For instance, if a company once ordered a consistent quantity of goods, a shift in market demand or the company’s strategy could lead to friction between the parties. The supplier, operating under the assumption of continued demand, may feel unfairly affected when the quantity of orders decreases. This shift in expectations can trigger disputes.

Preserving business relationships over disputes

In conclusion, disputes in implied contracts often arise from a lack of clarity, evolving circumstances and unspoken expectations. However, mitigating the risk of such disputes may not need to be complicated. Clear and open communication can often save both parties a lot of trouble. They just need to maintain transparency and document what they agree on to prevent potential conflicts.

When disputes arise, they may reach out to legal professionals or consider alternative dispute resolution methods. These options can be a constructive way to resolve issues while maintaining the strength of business relationships.