Implied Terms in Contract Law | Express Terms vs Implied Terms

Implied Terms in Implied Terms in Contract lawContract Law

Implied terms in contract law (or implied conditions) are those terms that, although not expressed, may be read into the contract if it would be reasonable to do so in order to give effect to the true intention of the parties. A term or condition that must be read into a contract if the intention of parties is not to be defeated; usually because it is inherent in the nature of the contract, or so obvious that it ‘goes without saying’. (‘Terms and conditions’ are commonly used together and the words have much the same meaning, although a term is a provision or proposition and a condition modifies or qualifies a contract.)

A term or condition may be implied to give ‘business efficacy’ to a contract; when the term is a necessary part of the general tenor of the agreement; or as a result of custom or trade usage. “It is well settled that the parties who contract on a subject-matter concerning which known usages prevail, incorporate such usages by implication into their agreements, if nothing is said to the contrary”, Hostetter v. Park, 137 US 30, 11 S Ct 1, 34 L Ed 568, 572 (1890). An implied term is what the parties must have intended, not what they may have intended and the term must be reasonable and equitable (Luxor (Eastbourne) Ltd v Cooper [1941] AC 108, 137 (HL); Trollope and Colls v North West Metropolitan Regional Hospital Board [1973] 1 WLR 601, 607, [1973] 2 All ER 260, 266 (HL); BP Refinery (Westpoint) Pty Ltd v Shire of Hastings [1977] 180 CLR 266, 16 ALR 363, 376 (PC); Philips Electronic Grand Public SA v British Sky Broadcasting Ltd [1995] EMLR 472, 481–2). The law may give effect to an implication when the result gives “such business efficacy to the transaction as must have been intended … as it must have been in the contemplation of both parties that he [each party] should be responsible for”, The Moorcock (1889) 14 PD 64, [1886–90] All ER Rep 530, 535. In particular, … more in (Implied Terms in Contract Law)

Express terms vs implied terms in contract law

A term or condition will not be implied if it conflicts with any express term of the contract (see implied covenant); if, within the context of the agreement, it acts to the undue detriment or burden of only one party to the contract; or when the express terms will suffice to make the contract effective in fulfilling the intention of the parties: “it is not competent for the court to make a contract for the parties which they have not thought fit to make for themselves, or to import a covenant which does not arise by fair and necessary implication from the language they have used”, Smith v The Mayor, etc. of Harwich (1857) 2 CB (NS) 651, 669, 140 Eng Rep 572 (3 Corbin on Contracts (Charlottesville, VA: ©1960- ), § 564). …). (Implied Terms in Contract Law)

In the US, implied terms in contract law

it has been held that a term should be implied into a building contract to the effect that the contractor will not interfere, or take any action, that will hinder the subcontractor in the performance of his duties, nor will he act in a way that will unnecessarily increase the cost of the subcontractor’s work (Lichter v. Mellon-Stuart Co., 193 F. Supp. 216 (WD Pa 1961); Anno: 74 ALR3d 187: Construction Delay—No Damage Clause, § 22). On the other hand, in English law, it has been decided that there is no general rule that the main contractor will make sufficient work available to ensure that the subcontractor will be able to work in the most efficient and economic matter (Martin Grant & Co Ltd v Sir Lindsay Parkinson & Co Ltd (1985) 3 Con LR 12 (CA)). (Implied Terms in Contract Law)

In common law, there is no implied term in a lease … .

Cf. constructive condition.  See also agent, caveat emptor, fit for the purpose, implied warranty, negligence, notice.

Bibliographic references for Implied Terms in Contract Law:

E.H. Rabin et al. Fundamentals of Modern Property Law (4th ed. New York: 2000), Assignment 1, ‘Implied Landlord’s Duties and Tenant’s Obligations’.
1 Williston on Contracts (4th ed. St. Paul, MN: ©1990- ), § 1:6 ‘Implied Terms in Contract Law’.
12 Williston on Contracts (4th ed. St. Paul, MN: ©1990- ), Ch. 34 ‘Usage and Custom’.

Paterson et al. Contract: Cases and Materials (11th ed. Pyrmont, NSW: 2009), Part V ‘Gap Filling – Implied Terms in contract law’.

Hudson’s Building and Engineering Contracts (11th ed. London: 1995), §§ 3-179—3-199.
Odgers’ Construction of Deeds and Statutes (5th ed. London: 1981), pp. 113–118.
Anson’s Law of Contract (29th ed. Oxford: 2010), pp. 155–161. (Implied Terms in Contract Law)
H.G. Beale et al. Contract Cases & Materials (5th ed. Oxford: 2008), Ch. 15 ‘Implied Terms in contract law’.
Chitty on Contracts (29th ed. London: 2006), Ch. 13 ‘Implied Terms’.
M.P. Furmston. Cheshire, Fifoot & Furmston’s Law of Contract (15th ed. Oxford: 2007), pp. 172–91.
L. Koffman & E. McDonald. The Law of Contract (5th ed. Oxford: 2004) Ch. 7 ‘Express and implied terms in contract law’.
K. Lewison. Interpretation of Contracts (4th ed. London: 2007), Ch. 6 ‘Implied Terms in contract law’.
G.H. Treitel. The Law of Contract (11th ed. London: 2003), pp. 201–214.
4(2) Halsbury’s Laws of England, Building Contracts, Architects, Engineers and Surveyors (4th ed. Reissue), § 334.
13 Halsbury’s Laws of England, Interpretation of Deeds and Non-Testamentary Instruments (4th ed. Reissue), §§ 180.
9(1) Halsbury’s Laws of England, Contract (4th ed. Reissue), §§ 778–89. (Implied Terms in Contract Law)

Note: Terms in bold, including implied terms in contract law, condition, constructive condition, custom, express term, term, usage are defined and explained in detail in our Encyclopedia of Real Estate Terms, Third Edition; as well as in Real Estate Defined

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