Terms implied by common law
Terms implied at common law refers to where the courts imply terms into a contract, where the term hasn’t been expressly agreed between the parties and has not been implied by statute. 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:
Terms implied through custom
Terms implied in fact
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:
Liverpool City Council v Irwin [1977] AC 239 (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)