FORT LAUDERDALE BUSINESS LITIGATION: IMPLIED CONTRACTS

An “implied contract” is a principle of law whereby courts will bind a party to an implied agreement when the elements of a contract are not otherwise met (an offer by one party over a matter which each party must provide some form of consideration which is accepted by another party). It is a fundamental principle of law that an implied contract cannot supplant an express contract. However, an implied contract can exist when parties to an express contract act in a way which exceeds the scope of the express contract. A recent case before the Fourth District Court of Appeal clarified this principle. Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also represents clients in business litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

An implied contract (aka implied-in-law contract or quasi-contract) is a legal principle which can establish liability when the parties did not actually agree to terms.

The elements of a cause of action for a quasi contract are that: (1) the plaintiff has conferred a benefit on the defendant; (2) the defendant has knowledge of the benefit; (3) the defendant has accepted or retained the benefit conferred and (4) the circumstances are such that it would be inequitable for the defendant to retain the benefit without paying fair value for it. Because the basis for recovery does not turn on the finding of an enforceable agreement, there may be recovery under a contract implied in law even where the parties had no dealings at all with each other.

Commerce P’ship 8098 Ltd. P’ship v. Equity Contracting Co., Inc., 695 So. 2d 383 (Fla. 4th DCA 1997).

Typically, when there is an express contract governing the parties’ relationship, there cannot also be an implied contract. “Quantum meruit is premised upon the absence of an express and enforceable agreement; accordingly, the existence of a valid, written contract between the parties necessarily precludes the doctrine’s application.” Daake v. Decks N Such Marine, Inc., 201 So. 3d 179 (Fla. 1st DCA 2016).

Business litigation cases have gone so far as to suggest that any express contract governing the subject matter at issue will prevent the imposition of an implied contract on the same issue. E.g. Atlantis Estate Acquisitions, Inc. v. DePierro, 125 So. 3d 889 (Fla. 4th DCA 2013) (“Unjust enrichment cannot apply where an express contract exists which allows the recovery”); Solutec Corp. v. Young & Lawrence Assocs., 243 So. 2d 605 (Fla. 4th DCA 1971) (“Any proof of an express agreement between the parties as to the compensation to be paid for the services rendered would defeat … an action based upon quantum meruit […]”); Diamond “S” Dev. Corp. v. Mercantile Bank, 989 So. 2d 696 (Fla. 1st DCA 2008) (“[A] plaintiff cannot pursue a quasi-contract claim for unjust enrichment if an express contract exists concerning the same subject matter”); Kovtan v. Frederiksen, 449 So. 2d 1 (Fla. 2d DCA 1984) (“It is well settled that the law will not imply a contract where an express contract exists concerning the same subject matter”).

However, Florida law does not require an express contract to supplant an implied contract when the express contract does not address the disputed issue. “[T]he law implies an obligation to pay a reasonable cost for the extras not provided for in a contract[.]” Forest Constr., Inc. v. Farrell-Cheek Steel Co., Fla. Diversified Props. Div., 484 So. 2d 40 (Fla. 2d DCA 1986). For example, a contractor that has an express contract with a homeowner to install tile floors is not necessarily limited to the recovery of the contract price. DeLotto v. Fennell, 56 So. 2d 518 (Fla. 1951) (“When parties enter into an agreement or contract for construction work and during the progress thereof alterations or changes are requested in the form of extras and otherwise, then the law implies an obligation to pay the reasonable costs thereof in addition to the stipulated sum named by the parties in the original agreement”).

In the recent case, F. H. Paschen, S.N. v. B&B Site Development, Inc., 4D19-3839, 2021 WL 359487 (Fla. 4th DCA Feb. 3, 2021), Florida’s Fourth District Court of Appeal was considering the issue as to whether the plaintiff should be permitted to claim compensation for matters not addressed in an express contract. The plaintiff was a subcontractor that had an express contract to replace asphalt for a general contractor. Near the project’s completion, the general contractor demanded that the subcontractor replace asphalt for a greater area than was originally contemplated in the express contract. The subcontractor did so to ensure that the project was completed timely, even though it asserted that this area was outside of the express contract. In the ensuing business litigation, the general contractor claimed that it was not required to pay for this additional work, because the asphalt replacement was contained in an express contract. F. H. Paschen disagreed, and held that an implied contract was created through the parties’ conduct for the additional area, because that work was outside the scope of the original contract.

Merely because an express contract exists does not mean that there might be no implied or quasi-contracts. The critical issue is whether the additional matter is outside the scope of the original agreement. Peter Mavrick is a Fort Lauderdale business litigation attorney who also practices business litigation in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.