e-lawresources
Providing resources for studying law
 
Custom Search
   Home            Terms implied by common law
Terms implied by common law
 

The courts are reluctant to imply terms in to a contract at common law. See Shell Uk v Lostock Garage. It is the parties' role to agree the terms of their particular agreement. It is generally not considered to be the role of the courts to rewrite a contract for the parties. Freedom of contract prevails. There are limited circumstances where the courts will imply a term into a contract at common law:

 
 
 
  1. Terms implied through custom
  2. Terms implied in fact
  3. Terms implied at law


 
 
 
Terms implied through custom

 
 
Where a particular term is prevalent in a trade the courts may imply a term in a contract of the same type in that trade:
 


Hutton v Warren [1836] EWHC Exch J61      (Case summary)

 
 
 
 
Terms implied in fact

Terms implied as fact are based on the imputed intention of the parties. Two tests have developed:
 

1. The business efficacy test:

This asks whether the term was necessary to give the contract business efficacy ie would the contract make business sense without it? - The courts will only imply a term where it is necessary to do so.
 
 
The Moorcock (1889) 14 PD 64              (Case summary)     
 



2. The officious bystander test:

Had an officious bystander been present at the time the contract was made and had suggested that such a term should be included, it must be obvious that both parties would have agreed to it.
 
 
Shirlaw v Southern Foundries [1939] 2 KB 206    (Case summary)

 
 
 
 
Terms implied in law

 
The courts may imply a term in law in contracts of a defined type eg Landlord/tenant, retailer/customer where the law generally offers some protection to the weaker party:
                                                                     (Case summary)
 
 
 
In addition to being a contract of a defined type, the term must be a reasonable one to include:


Wilson v Best Travel [1993] 1 All ER 353       (Case summary)
 
 
 

The term must also be sufficiently certain:
 
 
 
Shell UK v Lostock Garage Limited [1976] 1 WLR 1187   (Case summary) 
 
 
 
Implied terms at Common Law