implied terms Flashcards
What are express terms?
Terms which are specifically identified and agreed by the parties. They are expressed in writing or orally.
What are implied terms?
Terms put into contracts by the courts in certain circumstances. They are not necessarily identified and agreed by the parties and the parties may have no awareness of them.
What are the 3 main ways implied terms can be put into contracts?
-By custom or trade usage
-By the common law
-By statute
What does custom or trade usage mean?
Terms implied by custom are where certain terms are customary/ usual in a type of contract, so apply even if not specifically stated. Some trades may have customs or trade guidelines that can imply terms into certain types of contract.
Which case is an example of terms implied through custom?
British Crane Hire Corp v Ipswich Plant Hire. There was no express term about returning the crane but the term in the trade’s standard contract was implied in the verbal contract made here because it was a term normally in these contracts. Therefore, the company hiring the crane had to return it to the owner.
What are the 2 ways common law terms can be implied?
-By fact
-By law
What does common law terms implied by fact mean?
This is where the parties were probably intending the situation to be covered by a term but did not specifically state it. The courts can add in this term to achieve what the parties intended.
What did Irwin v LCC say about implying terms by fact?
Unless both parties would agree to the term, it cannot be implied through fact.
How should we judge what the parties intended for implying terms by fact?
Marks and Spencer v Paribas- We should look at what a reasonable person would have understood to be the intention of the parties in the circumstance.
What are the 2 tests for figuring out if the parties intended a term for implying terms by fact?
-The business efficacy test
-The officious bystander test
How does the business efficacy test work?
This is where the contract simply wouldn’t work without the term, therefore it must have been the parties’ intent to include it. They would not intend to create a contract that is pointless.
Which case is an example of the business efficacy test?
The Moorcock. It would have been pointless to make a contract about docking at a wharf if that wharf was actually unsafe . The parties clearly did not intend to make a contract that would damage the boat.
How does the officious bystander test work?
‘If while the parties were making their bargain, an officious bystander was to suggest some express term in their agreement, they would likely suppress him with a common ‘oh of course’. In other words, the term is something the parties very obviously wanted in the contract, so it literally goes without saying.
Which case is an example of the officious bystander test?
Shirlaw v Southern Foundries
How do common terms implied by law work?
These are not based on the intention of the parties, but on what obligations the judge feels should arise naturally in a contractual relationship. Once a term has been implied in a general type of contract (employment contracts, leases..), this will create a precedent for other judges to follow in similar contracts.
