terms: implied and express terms

Question 1

express terms

Answer 1

Express terms are specifically agreed
between the parties.
· They will either be written in the contract or verbally agreed between the parties when the contract is formed.
e.g. jill buys tea at starbucks for £3- jill will pay the money and starbucks will give the tea.

Thornton v Shoe Lane Parking

Question 2

implied terms

Answer 2

Aren’t mentioned in the contract, but they are expected. The courts will impose these upon the parties based on the facts of the case. e.g
implied terms of tea at Starbucks is that it comes hot with sugar available

Question 3

what ways can terms be implied by common law

Answer 3

a) Business efficacy/ The officious bystander test

b) By custom

c) Prior dealings between the parties.

Question 4

Business efficacy- and officious bystander test- implied terms

Answer 4

The courts will imply a term into the contract if it is necessary for the contract to work on a business-like-basis. In order to assess this, the courts use a two-part test:

1. Is the term necessary to make the contract effective?
2. If the parties to the contract had thought about it, would they have agreed that this term should be in the contract?

Question 5

Business Efficacy- necessary to make effective

Answer 5

The term must be necessary to give the contract business effect. If the contract makes business sense without the term, the courts will not imply a term
The Moorcock
Schawel v Reade

Question 6

the moorcock

Answer 6

The court implied a term in fact, that the riverbed would be safe for mooring. The court introduced the business efficacy test.- implied term as it makes business sense

Question 7

Schawel v Reade

Answer 7

horse had health issues
D was in breach even though not written it was held to be an implied term.

Question 8

business efficacy AO3

Answer 8

This is seen as a good test as the judges are giving effect to what it seems like the parties to the agreement want/wanted when then made the agreement for it making business sense.

This upholds freedom of contract, because… it allows intentions of parties to be upheld and protects parties for something that should be a part of the contract by implying terms like in the Moorcock.

HOWEVER, an issue is judges will not always know the true intention of the parties and with the parties raising contrasting points, the judge will be left to pick the most believable argument.

Question 9

officious bystander test- implied

Answer 9

Had another party (officious bystander) been there at the time the contract was made, would they have presumed the term in question should be implied. If so, the court will imply the term.

· To be implied using this test, it must be obvious that both parties would have agreed to the term at the time was contract was made (Shirlaw v Southern Foundries Ltd.)
if a contract isnt signed on one occasion then no terms can be implied- hollier v rambler

Terms will not be implied into a contract if the parties would never have agreed to them.
Shell v Lostock Garage
Implied terms are genuine if the reasonable person would have understood the term to be the intention of both parties (Egan v Static Control Components (Europe) Ltd).
Marks and Spencer PLC v BNP Paribas Securities Services Trust,
implied term must be reasonable

Question 10

negative about the officious bystander test

Answer 10

This is not a straightforward test and is a dated approach. ‘Officious bystander’ is purely metaphorical. Some question how the court will truly know whether the parties would have agreed to it if they never actually discussed the matter.

its also subjective as people and judges will have different perspectives on what the officious bystander would have done based on their opinion/bias.

however allows another perspective beyond parties, if there is conflicting arguments between C and D it provides clarity so correct decisions can be made on what’s reasonable to do and professional expertise used.

Question 11

hollier v rambler

Answer 11

implied terms
failure to sign the contract on one occassion meant the term couldnt be implied so the garage was liable for the damage
doesnt matter that one of the terms before was they wont be liable for the damage

Question 12

evaluation for hollier v rambler– implied terms

Answer 12

This verdict is argued to be unfair. Hollier had been to the garage on a number of occasions and had no issue signing the agreement which states that the company were not responsible for damage. The agreement hadn’t changed.

Had the parties made the agreement face-to-face and the agreement been signed, this case could have easily gone the other way.

however creates clear precedent, upholds ROL and public policy
if it was business to business its more likely the term would have been incorporated.

Question 13

shell v lostock garage

Answer 13

Shell would never have agreed to such a term, so the claim failed. (to give best price)

Question 14

what did Marks and Spencer PLC v BNP Paribas Securities Services Trust clarify

Answer 14

clarified the law relating to implied terms and said ‘reasonableness’ is to be judged objectively- considering what the parties would have agreed.
“a term can only be implied if, without the term, the contract would lack commercial or practical coherence” (wont make business sense)
Officious bystander

Question 15

limitation of business efficacy and officious bystander

Answer 15

Arguably this is unfair. The term itself was never discussed by the parties, so it is unjust to impose a term which a party to the contract perhaps would never have considered.

The fact that The SC has confirmed that implied terms must be reasonable adds no value to the Business Efficacy and the Officious Bystander test. In reality, if the criteria for the test has been met, then the court will deem the implied term to be reasonable too.

The BE and OB tests are not to be used in combination. Instead, the court will determine which of these tests they wish to apply to a case, which of course is an example of judicial creativity. However, if the criteria for one test has been met, it is likely the criteria for both tests will be met, so it doesn’t actually matter which of the tests the courts choose to use.

Question 16

terms implied by custom

Answer 16

Much of English law is founded upon custom.
Hutton v Warren

Question 17

Hutton v Warren

Answer 17

It was customary during the time for contracts to contain a term so this was an implied term of the contract (not to terminate tenancy before harvest)
terms implied by custom

Question 18

Terms implied by prior dealings between parties

Answer 18

Prior conduct of the parties may indicate terms to be implied as in Hillas v Arcos where the court decided that prior terms stated in a previous contract would be implied terms within the contract in question.

Question 19

how does Terms implied by prior dealings between parties conflict with a previous case

Answer 19

p- it conflicts with hollier v rambler motors as that suggested if the contract was signed on one occasion terms cant be implied which leads to confusion and inconsistent outcomes
dp- ROL
wdp- however may be justified as hutton v warren was between businesses and encourages consumers and businesses to sign contracts.

Question 20

whats a general limitation about the 4 tests for implied terms

Answer 20

Having multiple tests will also promote judicial creativity
using discretion to decide outcomes
but outcome most appropriate for case