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Implication Of Terms Notes

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Broadly speaking, the law recognises four rationales for the implication of terms. They are

1) Implication from custom

2) Implication from presumed intention ("terms implied in fact")
o 3) Implication from the parties' legal relationship ("terms implied in law")
o 4) Implication from statute.

1) Implication from Custom:
o Smith v Wilson (1832) - the term that "1000 rabbits", in a contract made in the 1830s in Suffolk, has the meaning "1200 rabbits".
 An exception to parol evidence rule.
o Hutton v Warren (1836) The tenant of a farm was given notice by his landlord to quit. The landlord later served notice that the tenant was bound, in accordance with a custom of the country, to continue to farm in a regular way until leaving.
 Tenant claimed that custom also entitled him to an allowance for the cost of seed and labour. Claim upheld.

2) Implication from presumed intention ("terms implied in fact")
o Gives effect to what the parties must be deemed to have intended. Will only be implied where 'necessary' to give effect to the intention of the parties.
 Will not be implied merely because the parties wopuld have both agreed to it if suggested (M&S v BNP
Paribas, Lord Sumption: only implied if, without that term., the contract would lack commercial and practical coherence).
o The Moorcock (1889) - owner of steamship leased wharf to moor. When the tide went out the ship was damaged as it hit river bed. Claimed damages on basis that contract implied that the wharf was in water sufficiently deep for safe mooring.
 CA agreed on basis of business efficacy - a presumption that the parties, as reasonable people in business, must be taken to have intended their contract to work

Reigate v Union Manufacturing [1918] - contract specified two grounds in their contract on which the agency would terminate (death of the agent, or by a period of notice).
 Scrutton LJ refused to imply term that terminated when one party ceased to do business: had it been put to the parties they would probably have disagreed about it,

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