Implied terms

Question 1

What is the general presumption of terms?

Answer 1

That parties have expressed, orally or in writing, every material term which they intend should govern their contract.
* there are terms that are inferred by courts - implied terms and these are binding to the same extent as an express term.
* Terms may be implied: by fact or law

Question 2

What are terms implied by fact?

Answer 2

To discover unexpressed intention of parties, court may take notice of trade customs, need to give ‘business efficacy,’ to contract and show course of dealing between the parties.
* one must ask when implying terms in fact what the reasonable person wouldm understand the contract to mean rather than subjective intentions

where there is an unambigous express provision in contract, court will not imply a term to the contrary

Question 3

What is trade or professional customs?

Answer 3

Where term is implied on grounds of custom, implication is based on assumption that it was the intention of the parties by well known customs of particular trade.

Question 4

A course of dealing between the parties?

Answer 4

Terms may be implied into agreement on basis that parties have dealt with each other in a praticular way on many occassions over a long period of time (consistent and regular) - may be presumed that parties intended to continue to deal with each other in same way and terms may be implied into contract by presumed intention.

Question 5

Business efficacy?

Answer 5

Terms may be implied to give business efficacy to a contract (e.g., make contract produce its intended objective)
* terms will not be implied on grounds that such implication will transform agreement into a business-like arrangement - term will only be implied on this ground, if without implied term, the arrangement would be so unworkable that sensible people could not be supposed to have entered into it

Question 6

What are terms implied by law?

Answer 6

Either implied at:
1. common law or
2. by statute
- Sales of Goods Act
- Consumer Rights Act
- Supplyof Goods and Services Act

Question 7

Why are terms implied at common law?

Answer 7

To give effect to legal duties which arise, as a matter of policy, out of certain common types of contractual relationships (e.g., landlord and tenant)

Question 8

How are terms implied by statute?

Answer 8

Statutory implied terms will operate irrespective of intention of the parties, unless a valid exemption clause.
* examples of statutory implied terms are to be found in SGA, CRA and SGSA.