Implied Terms

Question 1

Is an implied term as binding as an express term?

Answer 1

Yes

Question 2

On what basis may a term be implied into a contract?

Answer 2

Either on fact or law

Question 3

What is an implied term on fact?

Answer 3

A term implied to give effect to the presumed but unexpressed intentions of the parties

Question 4

What is an implied term in law?

Answer 4

A term implied because the courts or statutes require it to be, regardless of the intention of the parties

Question 5

When will the courts imply a term in fact?

Answer 5

Where it is necessary to give effect to the unexpressed intentions of the parties, either because the courts take notice of trade customs or need to give business efficacy to a contract

Will not do it where an unambiguous express provision in the contract

Question 6

Why will the court imply a term on the basis of professional customs?

Answer 6

Assumption that intention of the parties to be bound by well-known customs of a particular trade

Question 7

Why will the court imply a term based on a course of dealings between the parties?

Answer 7

On basis that the parties have dealt with each other over a long period of time. Only implied in where the dealings of the parties have followed a consistent and regular pattern

Question 8

Why will the court imply a term based on business efficacy?

Answer 8

Will only be implied if without the implied term the arrangement would be so unworkable that sensible people could not be supposed to have entered into it.

Question 9

When will terms be implied as a matter of common law?

Answer 9

Will be implied in order to give effect to legal duties which arise as a matter of policy, out of certain common types of contractual relations.

Question 10

When will terms be implied as a matter of statute?

Answer 10

When statutes require terms to be implied into that certain kind of contract.

Will apply irrespective of the intention of the parties unless valid exemption clause

Question 11

Under SoGA 1979, what is the implied term as to title (s 12)?

Answer 11

Implied term that seller has right to sell the goods

Question 12

Under SoGA 1979, what is the implied term as to correspondence with description (s 13)?

Answer 12

Implied term that goods must correspond with any description of them having certain characteristics and specifications

Question 13

Under SoGA 1979, what is the implied term as to satisfactory quality (s 14)?

Answer 13

Implied term that goods are of satisfactory quality

Question 14

What constitutes satisfactory quality under SoGA 1979 s 14?

Answer 14

Goods meet standard that a reasonable person would regard as satisfactory, taking into account

• description of the goods
• the price (if relevant)
• other relevant circumstances

Question 15

What factors should be taken into account when considering if goods are of satisfactory quality under SoGA 1979 s 14?

Answer 15

• fitness for all purposes for which goods of the kind in question are commonly supplied
• appearance and finish
• freedom from minor defects
• safety
• durability

Question 16

How can seller protect themselves from goods not being of satisfactory quality?

Answer 16

By drawing buyer’s attention to any defects before contract is made or if the buyer examines the goods before the contract, then seller protected from any defects that an examination ought to reveal

Question 17

Under SoGA 1979, what is the implied term as to fitness for a particular purpose (s 14(3))?

Answer 17

Goods should be fit for any particular purpose the buyer buys them for that they bring to the attention of the seller

Question 18

When will a seller not be liable under the implied term that goods are fit for a particular purpose under SoGA 1979?

Answer 18

Where buyer does not rely or that it is unreasonable for them to rely on the seller’s skill or judgment

Question 19

Under SoGA 1979, what are the implied terms as to sale by sample (s 15)?

Answer 19

That the bulk will correspond to the sample

The goods will be free from any defect, making their quality unsatisfactory, which would not be apparent on reasonable examination of the sample

Question 20

What is the remedy under SoGA for a slight breach of one of the implied terms above?

Answer 20

If breach is so slight that would be unreasonable for buyer to reject goods, then remedy is damages

Question 21

Who has the burden of proving a breach of an implied term under SoGA is so slight it would be unreasonable for buyer to reject?

Answer 21

Seller

Question 22

Can a seller’s liability under SoGA be restricted or excluded?

Answer 22

Yes subject to Unfair Contracts Terms Act which does significantly reduce ability of seller to restrict or exclude its liability

Question 23

What contracts are covered by the Supply of Goods and Services Act 1982?

Answer 23

• certain contracts for transfer of property in goods
• contracts for hire of goods
• contracts for supply of services

Question 24

What is meant by contract to transfer of property in goods?

Answer 24

Contracts where one person transfers or agrees to transfer to another property in goods other than:

• contract of sale of goods
• hire purchase
• contract where property in goods is to be transferred in exchange for trading stamps
• transfer made by deed without consideration
• contract intended to operate by way of security

Question 25

Under SGSA what is meant be a contract for hire of goods?

Answer 25

A contract under which party A owns the goods but party B has voluntary possession of the goods

Question 26

What terms are implied for a contract for supply of services?

Answer 26

• there will be reasonable care and skill in carrying out service
• supplier will carry out service within reasonable time
• the party contracting will pay a reasonable charge

Question 27

Can you contract out of the implied terms under SGSA?

Answer 27

Yes subject to Unfair Contract Terms Act which significantly limits ability to vary the terms

Question 28

Who is a consumer under the Consumer Rights Act 2015?

Answer 28

An individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession

Question 29

Who is a trader under the CRA 2015?

Answer 29

A person acting for purposes relating to that person’s trade, business, craft or profession

Question 30

What contracts are covered by the CRA 2015?

Answer 30

• contracts for goods
• contract for digital content
• contracts for services

Question 31

What key rights are implied for sale of goods under CRA 2015?

Answer 31

• goods should be of satisfactory quality
• goods should be reasonably fit for any purpose which the consumer makes known to the trader
• goods sold by description correspond to that description

Question 32

What key terms are implied for contract for digital content under CRA 2015?

Answer 32

• goods are of satisfactory quality
• goods reasonably fit for purpose
• goods should match any description given by the trader to the consumer

Question 33

What key terms are implied for contract for services under CRA 2015?

Answer 33

• service is performed with reasonable care and skill
• reasonable price is to be paid (if not agreed)
• if time is not fixed, service is provided within a reasonable time

Anything said or written to consumer, by trader about trader or service is to be included as a term where it is taken into account by the consumer:

• when deciding to contract
• when making any decision about the service after entering the contract

Question 34

What remedies are there under CRA 2015 for contract for goods?

Answer 34

• short term right to reject (30 days)
• right to repair or replacement (where possible and not disproportionate)
• right to price reduction or final right to reject (final remedies, reject within 6 months)

Question 35

What remedies are there under CRA 2015 for contract for digital content?

Answer 35

• right to repair or replacement (repair must be done within a reasonable time without significant inconvenience to consumer, not available where impossible or disproportionate)
• right to price reduction (exercisable only where consumer cannot repair or replace

Question 36

What remedies are there under CRA 2015 for contract for service?

Answer 36

• right to require repeat performance (must be done within a reasonable time without significant inconvenience to consumer, repeat performance cannot be done if impossible)
• right to a price reduction (final remedy)

Question 37

What remedies does a party have for the other party breaching a condition?

Answer 37

As a general rule:

• if party breaches condition, the innocent party has a right to treat the contract as repudiated
• can also sue for damages
• may instead affirm the contract (can still sue for damages for breach)

Question 38

What remedies does the innocent party have for breach of warranty?

Answer 38

Only remedy is damages

Question 39

What is a condition?

Answer 39

A condition is an important term that goes to the root of the contract

Question 40

What is a warranty?

Answer 40

A warranty is a less important term that does not go to the root of the contract

Question 41

How do you distinguish between a condition and warranty?

Answer 41

Ask, whether the parties intended, at the time of contracting, that any breach of the relevant term could result in the innocent party terminating

Question 42

What is the developing theory and treatment in relation to innominate terms?

Answer 42

That many terms at outset are neither conditions or warranties but lie somewhere in-between (intermediate terms).

Court should look at consequence of breach and ask:

‘Does breach deprive party not in default of substantially the whole benefit which it was intended that he should obtain from the contract?’

If yes - condition

if no - warranty

Question 43

Is breach of time for performance or completion a repudiatory breach?

Answer 43

Yes if time is of the essence

If time is not of the essence, it can become so by innocent party serving notice on defaulting party which states time is of the essence and providing a completion date which must be reasonable