Which type of contract is characterized by an implied understanding rather than a written agreement?

The type of contract characterized by an implied understanding rather than a written agreement is the implied contract. In an implied contract, the terms and conditions are not explicitly stated but are inferred from the actions, conduct, or circumstances of the parties involved. For instance, when a person orders food at a restaurant, there is an implied contract that the diner will pay for the meal upon service, even though there is no written agreement.

Implied contracts are recognized by law as valid, provided that the parties have acted in a way that indicates acceptance of the terms, thereby creating a binding agreement through their conduct. This concept differentiates it from expressed contracts, which involve explicit agreements written or verbally stated; unilateral contracts, where one party makes a promise in exchange for an act; and formal contracts, which typically require specific forms or procedures to be legally enforceable. By understanding this distinction, one can appreciate how implied contracts function within legal settings even when not formally documented.