This chapter discusses implied terms. Terms may be implied into contracts from three principal sources: statute, custom, and the courts. Parliament has, on a number of occasions, implied terms into contracts. The precise reason for the implication of the term depends upon the particular statute. It may be to give effect to the presumed intention of the parties; it may be to reduce uncertainty by enacting a default rule out of which the parties can contract if they do not like the term that Parliament has seen fit to imply; or it may be to protect one party to the transaction from the superior bargaining power of the other. Terms can also be implied into contracts by custom where the custom is certain, reasonable, and notorious. Customs and usages are an important source of obligations in commercial contracts. Terms implied by the courts can be divided into two groups, namely terms implied in fact and terms implied in law. A term is implied in fact when it is implied into the contract in order to give effect to what is deemed by the court to be the unexpressed intention of the parties and is implied because it is necessary to make the contract work. Terms implied in law ‘are those terms that are consistently implied into all contracts of a particular type because of the nature of the contract, rather than the supposed intentions of the parties’.
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This chapter discusses implied terms. Terms may be implied into contracts from three principal sources: statute, custom, and the courts. Parliament has, on a number of occasions, implied terms into contracts. The precise reason for the implication of the term depends upon the particular statute. It may be to give effect to the presumed intention of the parties; it may be to reduce uncertainty by enacting a default rule out of which the parties can contract if they do not like the term that Parliament has seen fit to imply; or it may be to protect one party to the transaction from the superior bargaining power of the other. Terms can also be implied into contracts by custom where the custom is certain, reasonable, and notorious. Customs and usages are an important source of obligations in commercial contracts. Terms implied by the courts can be divided into two groups, namely terms implied in fact and terms implied in law. A term is implied in fact when it is implied into the contract in order to give effect to what is deemed by the court to be the unexpressed intention of the parties and is implied because it is necessary to make the contract work. Terms implied in law ‘are those terms that are consistently implied into all contracts of a particular type because of the nature of the contract, rather than the supposed intentions of the parties’.
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Essential Cases: Contract Law provides a bridge between course textbooks and key case judgments. This case document summarizes the facts and decision in Taylor v Caldwell (1863) 3 B & S 826. The document also includes supporting commentary from author Nicola Jackson.
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This chapter first examines the common law rules regulating the variation of the terms of the contract of employment. It focuses on the situation where the employer seeks to unilaterally modify the terms of the employment contract, for instance in light of modern pressures on management to demand greater labour flexibility in order to adapt to changing market conditions. The chapter then moves on to address the ability of the employer to suspend the contract of employment, for instance where the employer suffers a downturn in demand for its products or services, or where an employee may be subject to disciplinary proceedings. Finally, it considers the future trajectory of the common law content of the personal contract of employment.
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The Q&A series offer the best preparation for tackling exam questions. Each book includes typical questions, bullet-pointed answer plans and suggested answers, author commentary, and illustrative diagrams and flowcharts. This chapter presents sample exam questions about express and implied terms. Through a mixture of problem questions and essays, students are guided through some of the key issues on the topic of express and implied terms including the different sources of employment law, when terms of collective agreements may be incorporated into the contract of employment, the rules regarding custom and practice, and discussion of important implied terms such as the implied term of trust and confidence. Students are also introduced to the current key debates in the area and provided with suggestions for additional reading for those who want to take things further.
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The Q&A series offer the best preparation for tackling exam questions. Each book includes typical questions, bullet-pointed answer plans and suggested answers, author commentary and illustrative diagrams and flowcharts. This chapter presents sample exam questions about express and implied terms. Through a mixture of problem questions and essays, students are guided through some of the key issues on the topic of express and implied terms including the different sources of employment law, when terms of collective agreements may be incorporated into the contract of employment, the rules regarding custom and practice, and discussion of important implied terms such as the implied term of trust and confidence. Students are also introduced to the current key debates in the area and provided with suggestions for additional reading for those who want to take things further.
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This chapter examines the nature and content of the contract of employment. It explains how the contract of employment is primarily a repository for the rights and obligations of the employer and employee. It introduces the statutory duty of an employer to provide the employee with a statement of the main particulars of employment, and considers whether this statement is exhaustive of the terms and conditions of the contract of employment. In analysing the employment contract’s content, the chapter focuses on express terms, external documents incorporated into the contract of employment, imposed terms, and implied terms in fact.
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The Concentrate Questions and Answers series offers the best preparation for tackling exam questions. Each book includes typical questions, answer plans and suggested answers, author commentary and other features. This chapter contains questions and answers concerning express and implied terms, how terms are to be identified and how they are to be classified in order to determine what consequences flow from their breach.
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This chapter focuses on the terms of the contract. Such terms can be expressed in writing or in oral statements. In addition, some terms can be implied into a contract by legislation or the courts. As a result, contracts can be in the form of a written document, an oral agreement, or even a combination of written terms and oral statements and all three can contain implied terms. The chapter then looks at how terms can be implied into contracts. It also explores the law on express terms. In the context of what has been agreed, there are two main types of dispute. One type of dispute relates to the existence of a term that a party claims has been breached. The other type of dispute over what has been agreed relates to the meaning of the terms. In such cases, the meaning of the disputed term will determine whether it has been breached. That requires the courts to interpret the term to reflect the parties’ apparent intentions.
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This chapter focuses on the employment contract. It first considers the emergence of contract over the past two centuries as the favoured legal analysis at common law of the employment relationship and the courts’ historical interaction with statute along the way. It then explores the various express terms and implied terms often found in a contract of employment. It briefly looks at the notion of imposed terms by which express terms are imposed upon the parties by way of the contract of employment through legislation. The chapter closes with an examination of the legal issues that arise when a contract of employment is varied.
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The Concentrate Questions and Answers series offers the best preparation for tackling exam questions. Each book includes typical questions, answer plans and suggested answers, author commentary, and other features. This chapter explores the terms of the contract. It contains questions and answers concerning express and implied terms, how terms are to be identified, and how they are to be classified in order to determine what consequences flow from their breach. The chapter also considers two key debates: the basis on which the courts imply terms into contracts, and whether the courts approach the classification of terms highlights a tension in the law between certainty and justice.
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This chapter examines whether a term should be imported into the contract, although it was never expressed in words; should the term be implied? A term can be implied into a particular contract because it is necessary to give effect to the parties’ intentions. This is known as ‘implication in fact’. Whether a term should be implied ‘in fact’ has traditionally depended upon whether the term was so obvious to both parties that it went without saying, or whether the term was necessary to give ‘business efficacy’ to the contract. A term might be implied ‘in law’ into all contracts of a particular type. Such terms might be implied as a result of statute or judicial decisions. Where a judge decides that a term should be implied ‘in law’, courts can take into account policy reasons when deciding whether an implied term is necessary for the type of contract at issue.
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This chapter looks at the terms which are implied into contracts of employment. Implied terms are those that are deemed to be present by a court despite never having been explicitly agreed or even discussed by the employer or employee. The chapter begins by setting out the different types of implied term, differentiating these from other types of terms, before going on to explore the major implied terms and their significance. It focuses in particular on the duty to maintain a relationship of mutual trust and confidence as this is the area in which the most significant legal developments have occurred. It then considers situations in which implied terms conflict with express terms, before discussing procedural issues in breach of contract cases.
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Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. The terms of the contract give substance to the contractual parties’ obligations. They lay down what each party is expected to do in performance of his obligations, and so it is crucial in any dispute to first establish the terms of the contract before looking to see whether one party has failed to perform his obligations. This chapter focuses on the positive terms of the contract. The discussions cover terms and representations; collateral warranties; implied terms; and conditions, warranties and innominate terms and the significance of the remedies, including termination, attached to each.
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Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. This chapter discusses employment contracts. Covenants potentially in restraint of trade are express written terms which may apply during the contract, but are usually expressed to apply after termination. They are a rare illustration of contractual terms, which must be in writing. The general purpose of these is to prevent a former employee competing against his former employers; for example, by taking commercially confidential information or influencing customers to give their business to the firm he has joined. The Supreme Court has recently ruled on the width of the doctrine of severance of such covenants. Topics covered include the provision of the written statement, a right which employees have enjoyed since 1963, but which was extended to workers in 2020; the sources of terms in employment contracts; duties of the employer; and duties of the employee. These duties or implied terms are divided into terms implied in law (ie inserted into every contract of employment) and terms implied in fact (ie inserted into a particular contract of employment). The latter are divided into terms implied in fact which work against the employers’ interests and terms which work against the employees’ interests. Examples of the former include the duty to pay wages; examples of the latter include the duty to obey reasonable orders.
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Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. This chapter discusses contractual terms and statutory protection. Parties to a contract may express terms and/or terms may be implied. The sources and effects of implied terms are essential to the rights of the parties and obligations imposed on them. Terms can be implied through the courts, through customs, and from statute. Terms are identified as conditions, warranties, or innominate and this distinction is relevant when identifying remedies for breach. Statutes regulate the rights and obligations applicable to consumers and traders. These include the Sale of Goods Act 1979, the Unfair Contract Terms Act 1977, and the substantial changes in contracts between consumers and traders introduced through the Consumer Rights Act 2015.
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Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. The terms of the contract give substance to the contractual parties’ obligations. They lay down what each party is expected to do in performance of his obligations, and so it is crucial in any dispute to first establish the terms of the contract before looking to see whether one party has failed to perform his obligations. This chapter focuses on the positive terms of the contract. The discussions cover terms and representations; collateral warranties; implied terms; and conditions, warranties and innominate terms and the significance of the remedies, including termination, attached to each.
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8. Filling the gaps
Implied terms
This chapter focuses on contracts which leave some issues unaddressed and the law of implied terms used by the courts to deal with such situations. It first explains the nature of implied terms and the process of implication that requires the court to strike a difficult balance, along with the tests for implication. It then considers terms implied in law, paying attention to implication by statute and at common law, before discussing terms implied in fact. More specifically, it explores the tests of business efficacy, obviousness, and the officious bystander, and the approach used based on Lord Hoffmann’s judgment in the Privy Council in Attorney General of Belize v Belize Telecom. The chapter also analyses implication by custom, along with good faith and cooperation as requirements for parties to a contract.
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8. Filling the gaps
Implied terms
This chapter focuses on contracts which leave some issues unaddressed and the law of implied terms used by the courts to deal with such situations. It first explains the nature of implied terms and the process of implication that requires the court to strike a difficult balance, along with the tests for implication. It then considers terms implied in law, paying attention to implication by statute and at common law, before discussing terms implied in fact. More specifically, it explores the test of business efficacy, obviousness, and the officious bystander, and the approach used based on Lord Hoffmann’s judgment in the Privy Council in Attorney General of Belize v Belize Telecom. The chapter also analyses implication by custom, along with good faith and cooperation as requirements for parties to a contract.
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This chapter looks at the creation of express and implied terms. In particular, it deals with spoken statements becoming express terms and the different types of implied terms. Terms implied in fact, in law, and by custom are addressed. The traditional ‘business efficacy test’, and ‘officious bystander test’ are looked at in relation to terms implied in fact, and developments leading up to and including the recent Supreme Court judgments of Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd and Wells v Devani. Consideration is given to the requirements for terms to be implied in law, at common law, and the growing recognition that, despite references to ‘necessity’, the implication of such terms is concerned with issues of fairness, reasonableness, and social policy.
