THE BASIS OF TACIT CONTRACTS

Abstract

Tacit contracts are contracts that are inferred from the conduct of the parties as opposed to written or verbal agreements embodying coinciding expressions of intention. Positive law reveals that the basis of, and especially the test for inferring such contracts, are a source of contention. Generally over the years the courts have fluctuated between subjective and objective approaches to contractual liability and this dichotomy is evident on the level of tacit contracts as well. In this article it is suggested that conflicting rationales and tests for tacit contracts simply cannot coherently co-exist in positive law and although subjective intention does indirectly influence the issue of contractual liability, when the existence of any contract – especially a tacit one – is contested on the basis of dissensus, a court of practical necessity will have to adjudicate the matter on an objective basis. In this regard the conduct of the parties in performing or preparing to perform in terms of the alleged agreement tends to play a prominent role. In the result it is more plausible and indeed preferable that objective criteria are employed by the courts to ascertain whether a tacit contract has arisen, a process which also leaves room for policy considerations to play a role.