Implied Terms

Question 1

What are express terms?

Answer 1

Terms which are specifically identified and agreed by the parties. They are expressed in writing or orally.

Question 2

What are implied terms?

Answer 2

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.

Question 3

What are the 3 main ways implied terms can be put into contracts?

Answer 3

-By custom or trade usage
-By the common law
-By statute

Question 4

What does custom or trade usage mean?

Answer 4

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.

Question 5

Which case is an example of terms implied through custom?

Answer 5

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.

Question 6

What are the 2 ways common law terms can be implied?

Answer 6

-By fact
-By law

Question 7

What does common law terms implied by fact mean?

Answer 7

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.

Question 8

What did Irwin v LCC say about implying terms by fact?

Answer 8

Unless both parties would agree to the term, it cannot be implied through fact.

Question 9

How should we judge what the parties intended for implying terms by fact?

Answer 9

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.

Question 10

What are the 2 tests for figuring out if the parties intended a term for implying terms by fact?

Answer 10

-The business efficacy test
-The officious bystander test

Question 11

How does the business efficacy test work?

Answer 11

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.

Question 12

Which case is an example of the business efficacy test?

Answer 12

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.

Question 13

How does the officious bystander test work?

Answer 13

‘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.

Question 14

Which case is an example of the officious bystander test?

Answer 14

Shirlaw v Southern Foundries

Question 15

How do common terms implied by law work?

Answer 15

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.

Question 16

What are some examples of common law terms implied by law?

Answer 16

Irwin- leases should contain a term that the landlord had a duty to take reasonable care of the building.
Terms in employment contracts like the employee should be paid and kept reasonably safe at work. However, statutory implied terms have largely taken over from these common law implied terms.

Question 17

How do terms implied by statute work?

Answer 17

Parliament implies terms into certain types of contract in order to protect parties who are in a weaker bargaining position, such as employees and consumers. In 2015, a lot of the law relating to consumer protection was consolidated into the Consumer Rights Act and this applies only to B2C contracts.

Question 18

What is the definition of a consumer under the Consumer Rights Act 2015?

Answer 18

s2 defines a consumer as a party entering into a contract for purposes that are wholly or mainly outside the individual’s trade, business, craft or profession.

Question 19

What is the definition of a trader/ business under the Consumer Rights Act 2015?

Answer 19

s2 defines a trader or business as a person acting for purposes relating to that person’s trade, business, craft or profession.

Question 20

What does s9 of the Consumer Rights Act 2015 say?

Answer 20

When a seller sells goods in the course of business, the goods will be of satisfactory quality. This standard is judged by what a reasonable person would consider satisfactory.

Question 21

What factors are taken into account to determine whether goods are of satisfactory quality?

Answer 21

-The price paid for the goods
-Any description
-The goods must be fit for their purpose
-The goods should be safe
-The goods should be durable
-The goods should be free from minor defects and the appearance and finish of the goods should be satisfactory

Question 22

What does s10 of the Consumer Rights Act 2015 say?

Answer 22

Where the buyer tells the seller that the goods are for a particular purpose, there is an implied term that the goods will be fit for this particular purpose. Rarely, a seller may be able to get out of this if they can show that the buyer didn’t rely on the seller’s skill and judgement when buying.

Question 23

Which case is an example of s10 of the Consumer Rights Act 2015?

Answer 23

Baldry v Marshall- the buyer wanted a car that was flexible, easily managed and comfortable for ordinary use. The sports car was none of these things. As the seller was a car dealer, and had been told the particular purpose of the car, it was reasonable to assume they would give him a car fit for purpose.

Question 24

What does s11 of the Consumer Rights Act 2015 say?

Answer 24

There is an implied condition that where goods are sold by description, they will correspond with that description.

Question 25

Which case is an example of s11 of the Consumer Rights Act 2015?

Answer 25

Re Moore and Co- the cans were described as being in packs of 30. Being packaged in groups of 24 meant they didn’t match the description.

Question 26

Which sections of the Consumer Rights Act cover remedies for goods?

Answer 26

-s20
-s23
-s24

Question 27

What does s20 of the Consumer Rights Act 2015 say?

Answer 27

Allows for the customer to reject the goods and claim a full refund as long as they do so within 30 days of purchase. If the goods are perishable, the time limit may be shorter.

Question 28

What does s23 of the Consumer Rights Act 2015 say?

Answer 28

Either within or after the 30 days, the consumer can ask for the goods to be repaired or replaced (if possible).

Question 29

What does s24 of the Consumer Rights Act 2015 say?

Answer 29

If the defect is still not fixed or is impossible to fix then the customer can insist on either a reduction in price or end the contract and receive a refund. The trader has to be prepared to give a 100% refund up to 6 months after purchase. Even after 6 months, the customer may still be able to leave the contract, but a refund may be reduced to take account of the use of the goods.