What is a Tacit Agreement Between Parties?
A tacit agreement or a silent agreement is an agreement that is assumed to exist between parties without any explicit verbal or written agreement. It is an understanding that is created through the actions or behaviors of the parties involved. In other words, a tacit agreement is an unspoken understanding between two or more parties.
The concept of tacit agreement is widely used in legal and business settings, particularly in contract law. In such cases, a tacit agreement could be considered legally binding, as long as it can be proven that the parties involved intended to enter into an agreement.
For example, if two companies repeatedly conduct business with each other without any formal contract in place, they may be seen to have a tacit agreement in place, as their actions imply that they have agreed to certain terms and conditions.
The Benefits and Risks of a Tacit Agreement
The establishment of a tacit agreement between parties can have both benefits and risks.
On the one hand, a tacit agreement can be beneficial in situations where parties have a longstanding relationship and a level of mutual trust. In such cases, a tacit agreement can reduce the time and effort required to negotiate formal terms, saving both parties time and resources.
On the other hand, a tacit agreement can be risky when parties have different interpretations of the unspoken agreement. This can lead to disputes and misunderstandings that can damage the relationship between the parties.
In addition, a tacit agreement may not be legally binding, and parties may find themselves in legal trouble if they are relying on an unspoken agreement rather than a legally binding contract.
How to Establish a Tacit Agreement
If parties wish to establish a tacit agreement, it is important to communicate openly and frequently to ensure that both parties are on the same page. This can involve discussing expectations and discussing possible scenarios that may arise.
In addition, it is important to document any agreements that are made. Though a tacit agreement may not be legally binding, documenting the terms of the agreement can help to avoid misunderstandings and disagreements down the line.
In summary, a tacit agreement refers to an unspoken understanding between parties. While it can be beneficial in certain situations, it can also be risky if the parties have different interpretations of the agreement. If parties wish to establish a tacit agreement, it is important to communicate openly and frequently and to document any agreements that are made.