Implicit contract

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Updated: Aug 20, 2021

An understanding between parties on acceptable forms of behaviour that is not part of any formal agreement. Implicit contracts arise in many social situations and have been proposed as an explanation of labour market institutions. Implicit contracts usually develop over time and represent trust between parties. For example, it has been suggested that Coca-Cola has an implicit contract with its consumers not to alter the formulation of its standard cola product.

Reference: Oxford Press Dictonary of Economics, 5th edt.



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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.