Tacit Agreement Test Contracts: Everything You Need to Know
Contracts are the foundation of any business agreement, and it is important to ensure that they are clear, enforceable, and legally binding. One way to determine if a contract is valid is by applying the “Tacit Agreement Test” or TAT.
What is a Tacit Agreement Test Contract?
A tacit agreement test contract is a contract that is created informally between two parties through their actions rather than through a written agreement. It is also known as an implied contract, and it is based on the principle that an agreement can be formed without the express agreement of both parties.
How Does Tacit Agreement Test Work?
The tacit agreement test is based on the theory that if two parties act as though a contract exists and both derive a benefit from it, then the contract is implied. For instance, if a homeowner hires a landscaper to maintain their yard and pays them for their services, the contract is implied and enforceable, even if it was never put in writing.
Applying Tacit Agreement Test in Contractual Disputes
If there is a dispute regarding a tacit agreement test contract, the court will consider the actions of the parties involved to determine if they have acted in a way that suggests they had a mutual agreement. For instance, if a plumber is called to fix a leaky faucet and completes the work, but no payment is made, the court may infer that the parties had an implied contract that the plumber expected to be paid for the services they rendered.
Benefits of Tacit Agreement Test Contracts
Tacit agreement test contracts have several advantages. For one, they are flexible, as they can be made informally and don`t require detailed documentation. This can save time and money on legal fees. Additionally, implied contracts can be easier to enforce in court as they are based on the actions of the parties involved rather than the terms of a written agreement.
Conclusion
Tacit agreement test contracts are a practical and valuable tool in business agreements that can be created through informal channels. They are an effective way of creating enforceable agreements that can save time and money in legal fees, particularly in scenarios where a formal written contract isn`t necessary. Nevertheless, it is essential to ensure that both parties have a clear understanding of the agreement`s terms to avoid disputes. As always, it is best practice to consult with an attorney before entering into any contractual agreement.