Certified Professional Public Buyer (CPPB) Practice Test

What is the nature of an "implied-in-fact contract"?

1. A contract explicitly stated in writing

2. A mutual agreement established through behavior

3. A formal agreement signed by both parties

4. A contract that is assumed without formal acknowledgment

The correct answer is: A mutual agreement established through behavior

An "implied-in-fact contract" is characterized by a mutual agreement that is created through the conduct and behavior of the parties involved, rather than through explicit written or verbal statements. This type of contract arises when the actions of the parties suggest that they have an agreement and intend to enter into a contract, even if no formal agreement has been documented. For instance, if someone goes to a restaurant, orders a meal, and eats it, an implied-in-fact contract is formed where the diner agrees to pay for the meal despite there being no written contract outlining these terms. The conduct of ordering the meal and consuming it implies that both parties have a mutual understanding and expectation of payment. In contrast, options that describe explicit writing or formal signing do not pertain to the nature of implied contracts, which rely solely on behavior and the surrounding circumstances to establish the agreement. This distinction highlights the broader understanding of contracts beyond solely formal or written agreements in legal and purchasing contexts.