Implied Terms Flashcards
What’s the difference between express and implied terms?
-Express are actually discussed and agreed
-Implied are automatically part of the contract even if not discussed
How can terms be implied into contracts?
-Common law (judges)
-Statutes like Consumer rights act 2015
How can terms be implied by common law?
-Business efficacy test/ officious bystander test (alternatives)
-Custom and prior dealings of the parties
Explain the business efficacy test
Case name
-The court looks at the term and asks whether it is necessary to make the contract effective, and whether it makes business sense.
-The Moorcock
The Moorcock
D’s owned a wharf with a jetty on the Thames, agreed to dock a ship and unload cargo at wharf.
Both parties aware that this could include the vessel being there at low tide and rest on the bottom
-When the ship grounded it broke on ridge of rock
-D’s stated no term covering this
-Court implied a term that the ship would be safe mooring and not damaged at low tide
Explain the officious bystander test
Explain the case that it came from
-What a reasonable 3rd party observer could have thought had been agreed
-Shirlawn v Southern Foundaries
-“If while the parties were making their bargain, an officious bystander were to suggest some term, the parties would say of course”
Case example for officious bystander test
-Shell v Lostock Garage
-Shell sold petrol and oil to garage
-Shell then sold petrol and oil to other garages for a lower price
-Garage argued that there was an implied term in contract that shell wouldn’t do this
-No implied term because shell would never have agreed to such term
What is the case that provides clarification for the law on terms implied by the business efficacy and officious bystander test and what did it state about implied terms
-Marks and Spencer v BNP paribas
-Term can only be implied if without the term, the contract would lack commercial or practical coherence/
Explain terms implied by custom
Case name
-Custom: what normally happens in that type of business
-Hutton v Warren
Hutton v Warren
-Local custom meant at the end of agricultural lease tenant farmer was entitled to allowance for seed and labour on land
-Decided that the terms of lease need to be viewed in light of the custom
Explain terms implied by previous dealings
Case name
-Something has always been agreed by these parties in past contracts
-Hillas v Arcos
Hillas v Arcos
-Contract in 1930 between parties, option clause for C’s to buy another 100,000 lengths of timber during 1931. 1931 agreement quite vague. In 1931 the c’s wanted a further 100,000 but refused to deliver. Argument was that the agreement was too vague there was no more than a basis for further negotiations
-Court decided that while option clause lacked specific detail it was implied it would be same terms as last contract
The law on implied terms from what acts had been consolidated and updated into the…. Act 2015?
-Sale of Goods act 1979
-Supply of Good and Services act 1982
-Consolidated into the Consumer Rights act 2015
Explain the consumer rights act 2015
-Implied terms into contracts between a trader and a consumer
-Applies to consumer contracts for sale or hire or hire-purchase of good or services (inc digital content)
Define consumer and trader
Consumer: ‘individual acting for purposes that are wholly or mainly outside that individuals trade business, craft or profession.’ - company can’t be consumer as not an individual
Trader: ‘a person acting for purposes relating to that person’s trade business craft or profession whether acting personally or through another person acting in the trader’s name or on their behalf’
