What are Tacit Contracts?
Tacit Contracts
1. Definition:
A Tacit Contract is a contract implied by conduct or silence rather than expressed in words (written or spoken).
It’s based on the actions or behavior of parties which indicate an intention to contract, even though nothing is explicitly stated.
The law infers the contract from circumstances, not from express agreement.
2. Difference from Express Contracts:
| Aspect | Express Contract | Tacit Contract |
|---|---|---|
| Formation | Clear written or spoken words | Implied from conduct or silence |
| Evidence of agreement | Direct evidence (words) | Indirect, inferred from behavior |
| Example | Signing a lease agreement | Using a service knowing it must be paid for |
3. How Tacit Contracts Work:
When one party behaves in a way that implies consent, and the other party accepts that conduct, the law treats it as a contract.
For example, if you take goods from a shop and leave the store without paying, it implies a contract to pay for those goods.
Silence alone usually doesn’t imply consent unless the circumstances show otherwise.
4. Relevant Case Law:
1. Lalman Shukla v. Gauri Dutt (1913)
Facts: A servant found a missing person and expected a reward even though he was not explicitly asked.
Held: No contract existed because there was no express or tacit promise of reward.
Significance: Shows the need for clear conduct or promise for tacit contracts.
2. Union of India v. Raman Iron Foundry (1974)
Issue: Whether a contract can be tacitly formed by conduct.
Held: The Supreme Court held that tacit contracts can be inferred from conduct and circumstances.
The case explained that actions showing mutual agreement without words can create a valid contract.
5. Examples of Tacit Contracts:
Hiring a taxi and traveling — you tacitly agree to pay the fare.
Eating in a restaurant — tacit contract to pay the bill.
Receiving a newspaper daily at your doorstep without explicit agreement but paying regularly.
6. Summary:
| Feature | Description |
|---|---|
| Definition | Contract inferred from conduct or silence |
| Formation | No words needed; inferred from actions |
| Requirement | Mutual intention inferred from circumstances |
| Case Example | Lalman Shukla v. Gauri Dutt, Union of India v. Raman Iron Foundry |
| Typical situations | Service use, buying goods, accepting benefits |
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