Certified Professional Public Buyer (CPPB) Practice Test

Which of the following best describes an implied-in-fact contract?

1. A formal contract signed by the parties involved

2. An agreement understood through actions rather than words

3. A contract only applicable in civil law

4. A verbal agreement without any documentation

The correct answer is: An agreement understood through actions rather than words

An implied-in-fact contract is best described as an agreement understood through actions rather than words. This type of contract arises when the parties involved have an agreement that is not explicitly stated but is inferred from their conduct, circumstances, or established patterns of behavior. For example, if a person consistently orders coffee at a cafe and pays for it without discussing the terms each time, both the patron and the cafe understand that there is an expectation of service in exchange for payment, which constitutes an implied-in-fact contract. The intent of the parties can be inferred from their actions rather than being spelled out in written or verbal forms. The other options highlight aspects that don't apply to an implied-in-fact contract. Formal contracts involve explicit agreements often documented in writing, which distinguishes them from implied-in-fact contracts. The notion of applicability in civil law does not specifically relate to the concept of implied-in-fact contracts, as these can be recognized in various legal contexts. Lastly, a verbal agreement without documentation typically refers to express contracts, as that implies a clear conversation establishing terms, contrasting the essence of implied-in-fact contracts based on actions.