Contract Law - Implied Terms

Summary

This week's focus is on implied terms in contracts, contrasting with express terms discussed previously. Implied terms are those understood but not explicitly stated. They can arise from industry customs, statutory provisions, or court decisions to meet reasonable expectations or correct contractual omissions. Notably, implied terms can't override express terms, unless clearly excluded. The video explores historical and modern examples, emphasizing the importance of context and objective reasonableness in implying terms.

Takeaways

• 📜 Implied terms are those understood and expected within a contract without being explicitly stated.
• 🔍 Implied terms can arise from custom, statute, or court decisions, but they cannot override express terms.
• 🏛️ Customs within industries can lead to implied terms, as seen in historical cases like Hutton v. Warren (1836).
• 🚢 Modern examples of implied terms often appear in sectors like shipping law.
• 📚 Statutes may imply terms to protect vulnerable parties, such as in employment or sale of goods legislation.
• ⚖️ Courts can imply terms to meet reasonable expectations or to remedy a failure of expression, as in Lister v. Romford Ice and Liverpool City Council v. Irwin.
• 🚫 Express terms can exclude implied terms, but the exclusion must be clear and cannot override statutory implied terms.
• 👨‍⚖️ Lord Hoffman's judgment in Belize case (2009) discusses the objective approach to implying terms.
• 🏥 In Johnston v. Bloomberg Health Authority, the court upheld the implied term of a safe workplace despite attempts to exclude it.
• 🤔 The introduction of implied terms can be complex, requiring consideration of industry customs, statutory protections, and reasonable expectations.

Q & A

What are implied terms in a contract?

Implied terms are provisions that are assumed to be part of a contract without being explicitly stated. They are inferred from the nature of the agreement, the conduct of the parties, or the surrounding circumstances.

How do implied terms differ from express terms?

Express terms are explicitly stated in the contract, either orally or in writing, whereas implied terms are not directly stated but are inferred from the context, conduct, or legal requirements.

What is the role of custom in implying terms into a contract?

Custom plays a significant role in implying terms where certain industries have established practices or norms that are generally followed. These customs can be implied into contracts even if they are not explicitly mentioned.

Can you provide an example of a case where custom was used to imply terms?

The case of Hutton v. Warren from 1836 is an example where farming customs were implied into a contract despite not being explicitly stated.

How do statutes contribute to the implication of terms in contracts?

Statutes can imply terms into contracts to protect vulnerable parties or to codify widely accepted customs. For instance, employment and sale of goods legislation often includes implied terms to ensure fairness.

What is the principle that prevents implied terms from overriding express terms?

The principle is 'expressum facit cessare tacitum', meaning that which is expressed renders what is implied silent. This means if a contract has express terms, they take precedence over any implied terms.

Can the courts imply terms into a contract?

Yes, courts can imply terms to meet reasonable expectations or to give business efficacy to a contract, but they cannot imply terms that contradict express terms.

What is the significance of the case of Lister v. Romford Ice and Cold Storage Ltd in employment law?

In Lister v. Romford Ice, the court implied a term that an employee should exercise reasonable care in their job, even though it was not explicitly stated in the contract.

Can implied terms be excluded by the contract parties?

Yes, parties can expressly exclude implied terms, but the exclusion must be clear and unequivocal. However, they cannot exclude terms implied by statute.

What is the role of objectivity in implying terms by the courts?

Objectivity is crucial as courts consider what a reasonable person in the position of the contracting parties would consider to be an implied term, rather than imposing subjective views of fairness.

Why is it important to consider the claimant's perspective when discussing implied terms?

The claimant's perspective is important because the implication of terms is often sought to achieve a desired outcome within the contract. Courts consider whether the claimant's expectations align with what would be reasonably implied.