Implied Terms

Question 1

what are implied terms?

Answer 1

terms can sometimes be implied in a contract without being explicitly stated. usually, rules set out in common law or statute law that govern contract law that don’t necessarily need to be stated in the contract

Question 2

two ways terms can be implied be the common law

Answer 2

through business efficacy and the officious bystander test
by custom or prior dealings between parties

Question 3

implied term: business efficacy

Answer 3

is the term necessary to make the contract efficient? (The Moorcock)

Question 4

The Moorcock

Answer 4

held: the riverbed should be reasonably safe for vessels, even though it wasn’t explicitly stated in the contract.
principle: implied terms in contracts, which can be inferred based on the nature of the agreement and the intentions of the parties involved.

Question 5

implied term: officious bystander

Answer 5

terms which are so obvious that if a bystander suggested them parties would agree they would obviously be in the contract (Shirlaw v Southern Foundries)

Question 6

Shirlaw v Southern Foundries

Answer 6

facts: Shirlaw claimed entitlement to a share of profits despite it not being in the company’s articles.
held: court ruled in his favor, establishing the principle of implied terms in contracts based on business efficacy and parties’ intentions.
principle: terms can be implied into contracts based on business efficacy and the intentions of the parties involved.

Question 7

implied term: when will terms not be implied?

Answer 7

if parties would have never agreed to them, had they thought about the terms- not implied (Shell UK v Lostack Garage)

Question 8

implied term: clear intention

Answer 8

implied terms reflect the clear intention of the parties (Egan v Static Control Components)

Question 9

Egan v Static Control Components

Answer 9

facts: Egan sued SCC for distributing microchips used in printer cartridges, alleging DMCA violation.
held: court ruled in favor of SCC, stating the microchips enabled interoperability, not copyright circumvention, thus lawful under the DMCA.
principle: microchips enabling interoperability are lawful under DMCA.

Question 10

implied term: reasonableness (objective)

Answer 10

what would reasonable people in the position of the two parties have agreed? (Marks and Spencer v BNP Paribas Securities Services)

Question 11

Marks and Spencer v BNP Paribas Securities Services

Answer 11

facts: M&S exercised a break clause in their lease, seeking a refund of rent paid in advance for the period post the break date. However, BNP Paribas Securities Services declined the refund request.
held: M&S was entitled to a refund of rent paid in advance for the period after exercising a break clause in the lease.
principle: tenants can claim a refund of rent paid in advance after exercising a break clause, unless the lease specifies otherwise.