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Terms implied by common law
The courts are reluctant to imply terms in to a contract at common law. 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:
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Terms implied through custom
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Terms implied in fact
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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:
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.
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.
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:
In addition to being a contract of a defined type, the term must be a reasonable one to include:
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