Implied Terms in Contract Law

Vocabulary practice flashcards covering terms implied by the courts, fact, law, custom, and statute based on the lecture by Dr Victoria Ridler.

Implied Terms

Terms that form part of a contract but are not expressed by either party as part of the agreement.

Express Terms

Terms explicitly articulated by the parties, involving questions of whether a statement was part of the contract or a representation, whether sufficient notice was given for incorporation, and what the terms mean in application (interpretation).

Terms Implied by Fact

Terms that are not expressly stated by either party, but which the court finds, on the individual facts of the case, to constitute part of what was agreed according to the presumed intention of the parties.

The Moorcock (1889) 14 PD 64

A case concerning a steamship damaged by an uneven riverbed while moored at a jetty; established that a term can be implied to give business efficacy to a transaction and prevent a failure of consideration.

Business Efficacy

A standard for implying terms by fact originating in The Moorcock, requiring a value judgment where a term is only implied if, without it, the contract would lack commercial or practical coherence.

Officious Bystander Test

A test from Shirlaw v Southern Foundries [1939] providing that an implied term is something so obvious that it goes without saying, such that the parties would testily suppress an interfering bystander with 'Oh, of course!'.

Trollope [1973] 1 WLR 601

A case critiquing the officious bystander test, affirming that the court does not make or improve contracts; an unexpressed term can only be implied if the parties must have intended it, not merely because reasonable men would have adopted it.

AG of Belize v Belize Telecom Ltd. [2009] UKPC 10

A Privy Council decision per Lord Hoffmann holding that implication is part of the process of construction, asking whether the instrument read as a whole against the relevant background would reasonably be understood to mean that.

Equitable Life Assurance Society v Hyman [2002] 1 AC 408

A case questioning whether there is a difference between implying a term based on the parties' intentions (what they would have intended had they considered the matter) and the reasonable expectations of the parties.

Marks & Spencer Plc v BNP 2015

A Supreme Court decision affirming that reasonableness is not enough and necessity is required; a term is implied only if, without it, the contract would lack commercial or practical coherence.

Yam Seng [2013] EWHC 111

A case recognizing a term of good faith implied by fact specifically in a relational contract, requiring a duty of honesty in the provision of information.

Terms Implied by Law

Terms that the court finds implied by the general type or category of contract rather than the individual facts of a particular case, based on wider considerations and legal incidents.

Liverpool City Council v Irwin [1977] AC 239

A leading case on terms implied by law concerning an incomplete tenancy agreement, finding an implied term regarding responsibility to maintain common areas such as hallways, lifts, and stairs.

Shell UK Ltd v Lostock Garage Ltd [1979] WLR 1187

A case where Lord Denning outlined that relationships of common occurrence are resolved by seeing if the law has already defined the obligation, or looking to what is reasonable in the general run of such cases.

Terms Implied by Custom

Terms implied into a contract by trade usage or local custom, which must satisfy five criteria: certain, notorious, reasonable, recognised as legally binding, and consistent with express terms.

Cunlife-Owen v Teather & Greenwood [1967] 1 WLR 1421

The case setting out the five requirements for implying a term by custom: it must be certain, notorious, reasonable, recognised as legally binding, and consistent with express terms.

Terms Implied by Statute

Terms implied or treated as included in contracts by Acts of Parliament (which possess legislative supremacy), such as the Sale of Goods Act 1979 and Consumer Rights Act 2015.

Sale of Goods Act 1979, Section 14(2)

The statutory provision establishing that where a seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality.

Satisfactory Quality (SOGA 1979 Section 14(2A))

The standard met if goods reach what a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant), and all the other relevant circumstances.