Implied Terms Flashcards
What are implied terms in contract law?
Implied terms are provisions that are not expressly stated in a contract but are included by law, custom, or necessity to ensure the contract functions effectively
What are terms implied in law?
These are terms imposed by law on specific types of contracts (e.g., employment, landlord-tenant) based on broader policy considerations
Can parties exclude terms implied in law?
Yes, but usually subject to statutory limitations
What is an example of a statute implying terms into contracts?
The Sale of Goods Act 1979 and the Consumer Rights Act 2015 imply terms regarding the title, quality, and fitness of goods
What are the 3 requirements for a term to be implied by custom?
It must be certain, notorious, and reasonable
What case established the principle that agricultural customs can imply terms into a contract?
Hutton v Warren (1836)
What is the business efficacy test for implied terms + what case introduced this?
A term is implied if the contract would lack practical or commercial viability without it
The Moorcock (1889)
What is the officious bystander test + what case established this?
A term is implied if it is so obvious that both parties would have agreed to it if suggested
Shirlaw v Southern Foundries (1939)
What are the 3 key limitations on implied terms?
- They must not contradict express terms (Duke of Westminster v Guild (1985))
- They must not be too vague (Walford v Miles (1992))
- They must not rewrite a carefully drafted contract (Shell UK Ltd v Lostock Garages Ltd (1976))
How do terms implied in fact differ from terms implied in law?
- Terms implied in fact are based on the specific intentions of the contracting parties and require the business efficacy test or officious bystander test
- Terms implied in law apply universally to certain contract types (e.g., employment, tenancy) regardless of the parties’ intent
