What does an implied contract signify under the UCC?

An implied contract under the Uniform Commercial Code (UCC) signifies that terms of the agreement can be inferred from the conduct of the parties involved rather than from explicit written or verbal statements. This type of contract arises when certain actions, behaviors, or circumstances suggest that a contract exists even without formal documentation.

For instance, if two parties conduct business in a way that demonstrates mutual agreement—such as a buyer purchasing goods from a seller and the seller providing those goods without any formalized documentation—this can establish the basis for an implied contract. The law recognizes these actions as legitimate indicators of an agreement, thus imbuing them with legal binding effect even in the absence of explicit terms.

Other options indicate misconceptions about contract formation. Some suggest that explicit agreements are mandatory, or that all contracts must be verbal, neither of which aligns with the UCC's provision for recognition of implied agreements. Furthermore, the assertion that an implied contract has no legal binding effect contradicts the principles of contract law that acknowledge the validity of implied agreements based on parties' conduct.