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An implicit contract refers to a transaction or relationship that is conducted without formal contract. For example, when you purchase a sandwich the contractual terms are simple enough to negate the need for a written agreement. Many businesses are based on implicit contracts not covered by law, but by mutual interest of the parties. An example of this is variable rates of interest on mortgages, there is no formal agreement by the building society not to raise rates substantially, however rates are not raised normally as it is in their interest to maintain competitive interest rates.
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