Terms Implied by Common Law

Question 1

Local custom

Answer 1

(Hutton v Warren)
If there is a disagreement about the provisions of the contract, a court may imply a term based on local custom or trade usage.

The approach would be the same if the court was asked to imply a term based on trade usage. It would not do so if there was a provision in the contract which contradicted the trade usage.

Question 2

Prior dealings

Answer 2

(Spurling v Bradshaw)
The exemption clause was incorporated through previous dealings. The defendant would have been aware of the term from the previous contracts and therefore it did form part of the contract.

Question 3

Presumed intention

Answer 3

(The Moorcock)
The “business efficacy” test.
Court should consider whether a term is necessary to make the contract work commercially.
Not enough that the term would be a reasonable one to imply to improve the contract.

(Shirlaw v Southern Foundries)
The ‘officious bystander test’
Bystander suggests a term to include, then, if the response of both parties would be a common, ‘Oh, of course’, the test would be passed and the court would imply the term into the contract.