Implied terms

Question 1

business efficacy
- unloading ship for a fee at a certain location - tide went up and caused damage
- sues for breach of contract - term was that the dock is safe - but not an expressed term
- CoA - found in favor of plaintiff
- The Court of Appeal held the defendant liable under the contract on the basis that there was an implied undertaking that the anchorage would be in such a condition as not to endanger the vessel, so far as reasonable care could provide. This undertaking was nowhere expressed in the contract: the courts read the undertaking into the contract in order to give the contract business efficacy.
- “an implication which the law draws with the object of giving efficacy to the transaction and
preventing such a failure of consideration as cannot have been within the contemplation of either of the parties”

Answer 1

The Moorcock [1889] 14 PD 64

Question 2

• the defendants engaged the plaintiffs to sell a Dundrum factory on a sole agency basis, but later sold the factory to a purchaser who had not been introduced by the plaintiffs
• The plaintiffs had been deprived of their commission and sued, claiming an implied term to the effect that the defendants would not themselves sell the premises so as to deprive the plaintiffs of their commission or to the effect that if the defendants went ahead and sold the premises without the plaintiffs’ involvement, the commission was nonetheless payable in those circumstances
• The Supreme Court refused to imply this term
  
  • not necessary for the efficacy of the contract that the defendants should be precluded from selling the premises themselves
  • not in the contract- not necessary— high bar to imply term- would help the plaintiff but was not necessary for business efficacy
  • not considered all possibilities- they could have dealt with that in expressed terms of contract

Answer 2

Murphy Buckley & Keogh v. Pye (Ireland) [1971] IR 57

Question 3

• unusual facts
  
  • packaging company that packed pharmaceuticals
• the HC implied a term into a supply contract requiring the defendant to give 12 months’ notice of any intention to transfer his packaging requirements elsewhere
  
  • further obliged, during this year-long notice period, to take a proportion of the plaintiff’s product.
  • The defendant testified that he would not have agreed to any express term as to notice, but Peart J was convinced that the business relationship of the parties, built up over many years, and the benefits of continuity of supply, justified a notice requirement on the application of the ‘business efficacy’ test
• controversial decision was reversed on appeal by the Supreme Court
  
  • Fennelly J noted that “the courts will not lightly infer terms” especially where, as here, the judge had difficulty in formulating the implied term with specific precision. As Clark asks, “What quantity of goods did Wyeth have to buy? At what price?”

Answer 3

Dakota Packaging v. Wyeth Medica Ireland [2005] 2 IR 54

Question 4

• an agreement was entered into by the parties which was intended to bring an end to their personal and business/employment relationship
• plaintiff should be paid 120,000 euros after a property was sold by the defendant- the price of the property could not go lower than 1.8m euros but nobody wanted to buy it for such price (financial crisis) - plaintiff fulfilled everything but could not be fulfilled
  
  • Nothing was included in the contract to deal with the eventuality that no buyer might be found at the reserve price (or higher).
• Peart J was satisfied to imply a term requiring that the plaintiff be paid regardless of the non-sale of the property, after a reasonable period of time had passed.

Answer 4

Kelly v. Callinan [2012] IEHC 520

Question 5

• classic formulation of the officious bystander test
• Prima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying so that, if, while the parties were making their bargain, an officious bystander were to suggest some express provision for it in their agreement, they would testily suppress him with a comment of “Oh, of course!”

Answer 5

Shirlaw v. Southern Foundries (1926) Ltd [1939] 2 KB 206

Question 6

• the plaintiff sued an auctioneer who had agreed to sell the plaintiff’s farm at auction
• auctioneer accepted a bid from an individual at the auction, but no binding contract was concluded because the auctioneer failed to draft a memorandum of agreement
• The contract was silent on this point, but it was held that there was an implied obligation on the auctioneer to use care and skill in concluding a binding contract

Answer 6

Kavanagh v. Gilbert [1875] IR 9 CL 136

Question 7

• the defendant and another workers’ union had in 1939 agreed a set of rules of the transfer of workers from one union to another, called the “Bridlington Agreement”
• In 1955 the defendant admitted the plaintiff to their union in breach of the Bridlington Agreement.
• The plaintiff was completely unaware of that agreement, and later when the breach was discovered the defendant sought to expel the plaintiff from its union and the plaintiff sued for breach of contract.
• The court rejected the defendant’s argument that it was implicit that the agreement be complied with, as the plaintiff had no knowledge of it.

Answer 7

Spring v. National Amalgamated Stevedores and Dockers Society [1956]

Question 8

• the defendant insurance provider cancelled the plaintiff’s policy without giving any reasons
• The plaintiff claimed an implied term existed in the insurance contract that cancellations were required to be backed up with reasons
• The Supreme Court refused to imply such a term, with Lynch J saying that the insurance company never would have agreed to such a provision in the contract. The insurers here suspected the plaintiff of arson, and if they had articulated this suspicion they would have exposed themselves to an action for defamation.

Answer 8

Carna Foods v. Eagle Star Insurance [1997] 2 ILRM 499

Question 9

• plaintiff sought the release of three frozen embryos to her for implantation in her uterus
• The husband had signed express consent forms at the time, consenting to semen collection, cryopreservation of the embryos, responsibility for the embryos, etc.
• The parties’ marriage broke down soon afterwards, and they separated. Some years later, the plaintiff argued that the previous agreements, signed by her husband, contained his express or implied consent to the implantation of the remaining embryos in her uterus.
• The Court, therefore, was satisfied that “in the absence of the consent forms indicating agreement, either expressly or by implication, there was no agreement as to what was to happen to the three frozen embryos in the circumstances which have arisen”. - can not be implied
• The Supreme Court unanimously dismissed the plaintiff’s appeal
  
  • J examined the forms signed by the husband in detail and concluded that none of them constituted an express agreement “to the implantation, years later, of the surplus frozen embryos”. Neither could the facts establish an implied consent.
  • J did not consider that that consent was irrevocable or that the husband could be estopped from withdrawing it at a later date in changed circumstances
  • familial agreement

Answer 9

Roche v. Roche

Question 10

• question arose as to whether the articles of association of a company implicitly prevented from remaining in office those directors who had been appointed by those holding specified shares in a situation where there was no longer any holder of such shares
• The articles expressly provided that the directors could only be removed by such non-existent persons
• The Privy Council held that there was such an implied preventative term, and Lord Hoffmann indicated that it should not matter whether it is the constitutional documents of a company or a contract that are being considered.
• There is only one question: is that what the instrument, read as a whole against the relevant background, would reasonably be understood to mean?
  
  • new test possibly- moving beyond those two
• Lord Hoffmann concluded that the traditional tests of “business efficacy” or “the officious bystander” should be viewed simply as overlapping methods utilised by the courts when they try “to express the central idea that the proposed implied term must spell out what the contract actually means or in which they have explained why they did not think that it did so”

Answer 10

AG of Belize v. Belize Telecom Ltd [2009] 1 WLR 1988

Question 11

• local authority- provision of accommodation
• the plaintiff Council’s tower-block was in poor repair with, inter alia, malfunctioning lifts, unlit stairwells and blocked rubbish chutes
• tenant withheld rent in protest and the Council sought possession
• City Council wanted to evict - breach of requirements
• courts implied- communal area should be governed by owner

Answer 11

Liverpool City Council v. Irwin [1977] AC 239

Question 12

• Supreme Court held that, where the Corporation had let a new unfinished flat to the plaintiff, they were liable under contract when it turned out that the flat suffered from bad ventilation, causing damp damage to the plaintiff’s possessions
• The court focused upon the fact that the corporation was under a statutory obligation under the Housing Act 1966, described by the court as major piece of social legislation aimed at dealing with the distressing problems of poor homeless families and at the elimination of overcrowding and unfit housing
• similar to the previous case

Answer 12

Siney v. Dublin Corporation [1980] IR 400

Question 13

-employers stigma from company doing illicit conduct

Answer 13

Mahmud & Malik v. BCCI [1998] AC 20

Question 14

• right not to join union- Constitution

Answer 14

Mescal v CIE