Implied Terms Flashcards
What is an implied term in a contract?
a) A term explicitly agreed upon by both parties
b) A term added to a contract by a third party
c) A term not expressly agreed upon but inferred by law or fact
d) A term that is written in the contract but hidden in small print
c) A term not expressly agreed upon but inferred by law or fact
Explanation: Implied terms are not expressly stated in the contract but are inferred by courts based on trade customs, prior dealings, business efficacy, or statutory obligations.
Which of the following is NOT a way that a term may be implied in fact?
a) Business efficacy
b) Trade customs
c) Court policy
d) Course of dealing
c) Court policy
Explanation: Terms implied in fact are based on the presumed intention of the parties, whereas court policy is a ground for implying terms in law.
What test is used to determine if a term is implied to make a contract workable?
a) The reasonableness test
b) The business efficacy test
c) The fairness test
d) The hypothetical agreement test
b) The business efficacy test
Explanation: The Moorcock (1889) established that a term can be implied if it is necessary to make the contract work effectively.
Which of the following cases introduced the ‘officious bystander test’?
a) The Moorcock
b) British Crane Hire v Ipswich Plant
c) Shirlaw v Southern Foundries
d) Hollier v Rambler Motors
c) Shirlaw v Southern Foundries
Explanation: Shirlaw v Southern Foundries (1939) introduced the officious bystander test, which asks: “If an officious bystander had suggested the term, would both parties have said, ‘Oh, of course’?”
Which of the following is an example of a term implied in law?
a) A custom in a particular industry
b) A past practice between the parties
c) A statutory requirement under the Consumer Rights Act 2015
d) A term agreed in an email exchange
c) A statutory requirement under the Consumer Rights Act 2015
Explanation: Terms implied in law apply to specific contract types, such as statutory protections for consumers under the Consumer Rights Act 2015.
A company hires excavation equipment. The hire contract is silent on responsibility for returning the equipment in good condition, but in the industry, it is standard for the hirer to be responsible. Will this term be implied?
a) Yes, because it is a common industry practice
b) No, because it was not expressly stated
c) Yes, but only if it is reasonable
d) No, because customs cannot be legally binding
a) Yes, because it is a common industry practice
Explanation: British Crane Hire v Ipswich Plant (1975) confirmed that trade customs can be implied into a contract when they are widely known and accepted in the industry.
Two companies have traded for five years. Every invoice states that late payments incur a 5% interest fee. One company is late with a payment but argues that they never explicitly agreed to this term. Can the interest charge be enforced?
a) Yes, because it was a consistent course of dealing
b) No, because the contract did not mention it
c) Yes, but only if the company signed a written agreement
d) No, because implied terms cannot include financial penalties
a) Yes, because it was a consistent course of dealing
Explanation: If a term has been consistently included in past transactions, it may be implied by course of dealing (Hollier v Rambler Motors).
A landlord fails to maintain the communal areas of an apartment block, even though the lease does not specify a duty to do so. Can the tenants take action?
a) No, because the lease does not include this duty
b) Yes, because this duty is implied by law
c) No, because landlords have no legal obligations unless stated in the contract
d) Yes, but only if all tenants agree to file a lawsuit
b) Yes, because this duty is implied by law
Explanation: Liverpool City Council v Irwin (1976) confirmed that landlords have a duty to maintain communal areas, even if not explicitly stated in a lease.
Which of the following is the primary distinction between terms implied in fact and terms implied in law?
a) Terms implied in fact apply to all contracts, whereas terms implied in law apply only to business contracts
b) Terms implied in fact are based on intent, whereas terms implied in law are based on legal principles
c) Terms implied in fact must be in writing, whereas terms implied in law do not
d) Terms implied in law can be overridden by an express term, whereas terms implied in fact cannot
b) Terms implied in fact are based on intent, whereas terms implied in law are based on legal principles
Explanation: Implied-in-fact terms reflect the parties’ intentions, while implied-in-law terms apply automatically based on legal policy or statutory provisions.
Which statute implies terms into contracts for the sale of goods?
a) The Supply of Goods and Services Act 1982
b) The Sale of Goods Act 1979
c) The Consumer Rights Act 2015
d) The Contracts (Rights of Third Parties) Act 1999
b) The Sale of Goods Act 1979
Explanation: The Sale of Goods Act 1979 implies terms about quality, fitness for purpose, and title in contracts for the sale of goods.
When will a term NOT be implied into a contract?
a) When the contract is already clear and unambiguous
b) When one party strongly disagrees with it
c) When the term benefits only one party
d) When the parties made the contract in writing
: a) When the contract is already clear and unambiguous
Explanation: Courts will not imply a term if the contract is already clear and complete (Attorney General of Belize v Belize Telecom).
A retailer sells a washing machine that breaks down after one use. The contract is silent on warranties. What law applies?
a) No law, because no warranty was provided
b) The Consumer Rights Act 2015 implies a term that goods must be of satisfactory quality
c) The retailer can refuse liability because it wasn’t in the contract
d) The buyer must prove the defect was the retailer’s fault
b) The Consumer Rights Act 2015 implies a term that goods must be of satisfactory quality
Explanation: Under the Consumer Rights Act 2015, goods must be of satisfactory quality, fit for purpose, and match their description.
A tenant’s heating system fails, but their lease is silent on repairs. Can they compel the landlord to fix it?
a) No, because the lease does not include this duty
b) Yes, because landlords are legally required to provide habitable conditions
c) No, because implied terms do not apply to rental agreements
d) Yes, but only if the tenant pays extra
b) Yes, because landlords are legally required to provide habitable conditions
Explanation: Courts imply a duty to maintain essential facilities into tenancy agreements (Liverpool City Council v Irwin).
A company claims a refund for defective goods, but the seller argues that their contract excludes refunds. Can the company rely on statutory implied terms?
a) Yes, unless an exemption clause is valid
b) No, because all contract terms must be express
c) Yes, because statutory terms override express terms
d) No, because refunds are not implied
a) Yes, unless an exemption clause is valid
Explanation: Statutory implied terms apply unless properly excluded (Supply of Goods and Services Act 1982).
A business contracts with a supplier for five years. They regularly operate under unwritten payment terms. If a dispute arises, will the court imply these terms?
a) Yes, if the course of dealing was regular and consistent
b) No, because contracts must be written
c) Yes, but only if both parties agree
d) No, because courts do not imply financial terms
a) Yes, if the course of dealing was regular and consistent
Explanation: A consistent course of dealing can imply terms into a contract (Hollier v Rambler Motors).
