Implied Terms of a contract

Question 1

Burger King Corp v Hungry Jack’s

Answer 1

Facts - BK entered contract giving HJ exclusive rights to develop BK franchises in Aust.
HJ was required to open 4 new BK stores every year but only with BK’s prior approval.
BK later decided to open its own stores and refused to give approval to HJ.
BK then terminated the contract claiming HJ breached it by failing to open new stores.
Decision - Term of good faith implied.
BK breached implied term by refusing approval for new stores.
BK’s refusal was not directed to furthering its legitimate rights.
Refusal was designed to frustrate the contract and allow BK to open its own stores (to take Aust. Market for itself).
BK had wrongfully terminated contract.

Question 2

Terms implied as a matter of law in certain contracts

Answer 2

Professional and other services
eg services rendered with reasonable care and skill
Work and materials
eg done with reasonable care and reasonably fit for purpose and materials are of good quality
Hire contracts
eg goods reasonably fit for purpose hired
Employment contracts
workplace is reasonably safe

Question 3

Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd

Answer 3

Contract to install shop door described as “burglar-proof”.
Burglars broke into shop by forcing the whole door from its frame.
Court – Breach of contract
Implied term that installation would be reasonably “burglar-proof”.

Question 4

British Crane Hire v Ipswich Plant Hire

Answer 4

Contract made by phone to hire a crane and driver.
Later owner sent a form – “hirer is liable for all costs”.
Similar forms used by hirer and recommended by industry association.
2 previous dealings over previous 10 months.
Crane became stuck due to carelessness of the driver.
Court – Hirer is liable for costs
Not implied due to past dealings
But implied based on trade custom.