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Implied Terms

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Nick Dowse Implied Terms – Structure of Answer Textbook: 254, Q & A: ?, Study Guide: 92 Structure of Answer 1. “Terms can be implied in a contract to give effect to the presumed intention of the parties, or in some instances, irrespective of the parties’ intentions.” 2. Term implied on the basis of business efficacy a. Implication must be reasonable and equitable b. Implication must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it c. Term must be so obvious that it goes without saying d. Term must be capable of clear expression e. Term must not contradict any express term of the contract (Codelfa Construction v State Rail) f. Evidence can be led to determine whether it is appropriate to imply the term (Codelfa) g. The more formal the contract, the more reluctant the court is to imply the term (Codelfa) 3. Term implied from previous consistent course of dealings a. Test for implication is based on reasonableness. b. Previous dealings must be sufficient, court will consider i. The number of dealings between the parties ii. The consistency of the dealings. c. Actual knowledge of the implied term may not be necessary (McCuthcheon) d. Parol evidence rule will not apply because it is implied as a presumed intention, so the parties cannot have intended the written contract to form the entire agreement. 4. Term implied from custom or usage a. Existence of custom or trade usage is a question of fact b. Custom or trade usage must be so well known that all parties can reasonably be presumed to have imported that term into the contract i. Must be sufficient evidence custom actually exists ii. Must have sufficient degree of notoriety (must be well-known) c. Term will not be implied if it is contrary to the express terms of th
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