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In addition to express terms agreed upon by the parties, contracts may also include terms implied by common law or statutory provisions. These implied terms are introduced to ensure fairness, fill gaps, and reflect the presumed intentions of the parties. They are automatically incorporated into contracts unless expressly excluded and can be vital in regulating the contractual relationship, especially in areas not covered by the express terms.
Common law implies certain terms into contracts based on established legal principles, judicial precedents, and the presumed intentions of the parties. Key types of common law implied terms include:
In this case, the court implied a term that the wharf owner must ensure the safety of the riverbed for docking ships. The term was implied to give "business efficacy" to the contract, meaning it was necessary to make the contract workable.
This case established the "officious bystander" test, where a term may be implied if it is so obvious that it goes without saying. If an officious bystander were to suggest that a certain term should be included, the parties would reply, "Oh, of course!"
Statutory provisions often imply terms into contracts to ensure fairness, protect consumers, and regulate specific industries. These statutory implied terms cannot typically be excluded, especially in consumer contracts. Key statutes include:
Under the Sale of Goods Act 1979, the court held that a new Range Rover with minor defects was not of satisfactory quality. This case highlighted the statutory implied term that goods must meet the standard that a reasonable person would regard as satisfactory, considering the description and price.
This case established that goods must be fit for any particular purpose made known to the seller. The plaintiff suffered a skin reaction due to improperly processed woolen underwear, which was not fit for its purpose, thus breaching the implied term under the Sale of Goods Act.
A tenant rents a property from a landlord without an express term regarding the maintenance of common areas. A term may be implied that the landlord is responsible for the upkeep and maintenance of these areas to ensure the property is fit for habitation.
A customer buys a laptop that stops working within a month due to a manufacturing defect. Under the Consumer Rights Act 2015, a term is implied that the goods must be of satisfactory quality. The customer can return the laptop for a repair, replacement, or refund.
Terms implied by common law and statute play a crucial role in ensuring contracts are fair and effective. They provide a safety net for parties by addressing issues that might not be covered explicitly in the contract. While common law implied terms arise from judicial interpretations and precedents, statutory implied terms are introduced through legislation to protect consumers and standardize contractual obligations. Understanding these implied terms helps parties know their rights and obligations, ensuring better compliance and reducing disputes.