Express and Implied Terms (Common Law)

Question 1

What are two terms within the contract and their definition?

Answer 1

1. Express terms: They can be specifically agreed between the party
2. Implied terms: Neither party agrees to it but they are assumed that they will be within the contract

Question 2

What are express terms?

Answer 2

• Express terms can either be made in writing or orally, but they must be a term and not a representation
• If it is a term, they can sue for a breach of contract and the remedy will depend on what type of term it is (warranty, condition and innominate)
• If it is not a term, the remedy will be misrepresentation as a representation was made

Question 3

What are implied terms?

Answer 3

• Implied terms are not expressly stated or written down however they are considered binding in a contract

Question 4

What two ways can the terms be implied?

Answer 4

1. Business efficacy and officious bystander
2. By customs or prior dealings

Question 5

What is the business efficacy?

Answer 5

1. Is the term necessary to make the contract effective
2. If they had thought about it, would they have agreed to the obvious term?
3. Was it obvious? Does it go without saying?

• If the term was obviously intended to have the term, the courts have the power to imply the term to produce the intended result

Question 6

What is the officious bystander test?

Answer 6

Defined in ‘Shirlaw v Southen Foundries’ =
- If someone (the officious bystander) was standing nearby when the contract was made and suggested a particular term, both parties would of course agreeing stating it goes without saying
- The terms would not be implied if the parties would not have agreed to it if it had not been suggested or thought about
- This is seen in Shell UK v Lostock Garage

Question 7

How are implied terms judged?

Answer 7

• Implied terms and their reasonableness should be judged objectively and what a reasonable person would have believed

Question 8

How can terms be implied by custom or prior dealings?

Answer 8

• If the parties have had prior dealings, prior conduct may indicate that terms were implied
• If there is customs that are established, this can be an implied term

Question 9

What are factors which distinguishes between representation and an implied term?

Answer 9

1. The importance = If the statement is important, it will be seen as a term (Couchman v Hill)
2. Special Knowledge of the statement maker = A person may be expected to have a higher understanding when making the statement (Oscar Chess v Williams) and (Dick Bentley v Harold Smith Motors)
3. Time Lag = If there is a statement in negotioations but it is made some time after, it is not a term
4. Written Contract = Tends to presume everything written is a term therefore if it is not written, it is likely a representation and not a term