Implied Terms (common Law)

Question 1

What are expressed and implied terms?

Answer 1

Expressed = specifically mentioned in contract. Either written or verbalised. (Price)

Implied = aren’t mentioned but expected. (Consumer rights)

Question 2

What is the first way a term can be implied by?

Answer 2

1. Business Efficacy / Officious Bystander Test

Business Efficacy - is the term necessary to make business sense?
Case : Moorcock (implied term as it wouldn’t have made sense without)

Question 3

What is the second way in which a term can be implied by?

Answer 3

Officious Bystander - IF another person was there at time contract was made, would they have presumed the term in question should have been implied. Established in (Shirley v Southern Foundries ltd)
Case : Hollier v Rambler - exclusion clause failed due to failure to sign documents
- Terms will not be implied if parties would never have agreed to them (Shell v Lostock Garage)
- Implied terms will be judged accordingly whether or not the reasonable person would have understood the term to be the intention of both parties.

Question 4

What is the third way in which a term may be implied?

Answer 4

Terms implied by custom - Courts look at what was the expected course of action at time contract was made.
Case: Hutton v Warren (Customary at time so there was an implied term)

Question 5

What is the fourth way in which a term may be implied?

Answer 5

Prior dealings - Prior conduct may indicate implied terms.
Case: Hillas v Arcos (prior terms in previous contracts would be implied terms in current contract)