Implied terms

Question 1

What is the general presumption regarding the terms of a contract?

Answer 1

The parties have expressed every material term they intend to govern their contract either orally or in writing.

Question 2

What is an ‘implied term’ in a contract?

Answer 2

It is a term which has not been expressed by the parties but is inferred by the courts.

Question 3

How does the binding nature of an implied term compare to that of an express term?

Answer 3

An implied term is binding to the same extent as an express term.

Question 4

What are the two main bases upon which a term may be implied into a contract?

Answer 4

A term may be implied on the basis of fact or law.

Question 5

For what purpose is a term ‘implied in fact’?

Answer 5

To give effect to the presumed but unexpressed intentions of the parties.

Question 6

For what reason is a term ‘implied in law’?

Answer 6

Because the courts or statute require it, regardless of the parties’ intentions.

Question 7

Under what circumstance will a court refuse to imply a term into a contract?

Answer 7

Where the parties have made an unambiguous express provision to the contrary.

Question 8

A term implied on the grounds of custom is based on what assumption?

Answer 8

That it was the intention of the parties to be bound by well-known customs of a particular trade.

Question 9

Which case is a key authority for implying terms based on trade custom?

Answer 9

British Crane Hire v Ipswich Plant [1975] QB 303.

Question 10

On what basis might a term be implied from a ‘course of dealing’ between parties?

Answer 10

On the basis that the parties have dealt with each other in a particular way on many occasions over a long period.

Question 11

What is the primary purpose of implying a term to give ‘business efficacy’ to a contract?

Answer 11

To make the contract produce its intended objective.

Question 12

Which 1889 case is the primary authority for the ‘business efficacy’ test?

Answer 12

The Moorcock (1889) 14 PD 64.

Question 13

A term will only be implied for business efficacy if, without it, the arrangement would be so _____ that sensible people could not be supposed to have entered into it.

Answer 13

unworkable

Question 14

What is the colloquial name for the test of obviousness for an implied term, where parties would respond ‘Oh, of course’?

Answer 14

The officious bystander test.

Question 15

Which case established the ‘officious bystander’ test for implying terms in fact?

Answer 15

Shirlaw v Southern Foundries [1939] 2 KB 206 CA.

Question 16

When implying terms in fact, what standard is used to understand the contract’s meaning?

Answer 16

The court asks what the reasonable person would understand the contract to mean, not the subjective intentions of the parties.

Question 17

For what reason are terms implied at common law?

Answer 17

To give effect to legal duties which arise, as a matter of policy, out of certain common types of contractual relationships.

Question 18

In which type of contractual relationship was a term famously implied at common law in Liverpool City Council v Irwin?

Answer 18

The landlord and tenant relationship.

Question 19

Do statutory implied terms depend on the intention of the parties?

Answer 19

No, statutory implied terms will operate irrespective of the intention of the parties.

Question 20

Under what circumstance might a statutory implied term not apply?

Answer 20

If there is a valid exemption clause.

Question 21

Name one of the key statutes mentioned that implies terms into contracts for the sale of goods.

Answer 21

The Sale of Goods Act 1979.

Question 22

Name one of the key statutes mentioned that implies terms into contracts for the supply of goods and services.

Answer 22

The Supply of Goods and Services Act 1982.

Question 23

Name one of the key statutes mentioned that implies terms into consumer contracts.

Answer 23

The Consumer Rights Act 2015.

Question 24

Terms implied in fact are based on the presumed but unexpressed _____ of the parties.

Answer 24

intentions

Question 25

What are the three grounds upon which a term can be implied in fact?

Answer 25

Trade or professional customs, a course of dealing between the parties, and business efficacy.

Question 26

Terms implied in law can be subdivided into which two categories?

Answer 26

Terms implied at common law and terms implied by statute.