Lloyd's Maritime and Commercial Law Quarterly
Recent developments in the law of implied terms
Paul S Davies *
This article considers recent cases on “individualised” implied terms. It analyses the recent decision of the Privy Council in A-G of Belize v. Belize Telecom and its subsequent reception in the English courts. It will be argued that the liberal approach in Belize, which seems to consider implication to be an aspect of interpretation, is misguided. The traditional tests are better suited to ensuring that terms are implied only rarely, and that the sanctity of the parties’ written agreement is preserved.
In Attorney-General of Belize v. Belize Telecom Ltd,1 Lord Hoffmann, giving the advice of the Privy Council, appeared to subsume implication of contract terms within a broad, liberal doctrine of interpretation.2 It is submitted that such a development is undesirable and should not be welcomed in English law. Interpretation should be concerned with ascertaining the meaning of words contained in the written agreement, whereas implication acts to supplement that instrument with terms additional to those expressly chosen by the parties. A term which is implied into a contract still, strictly, needs to be interpreted.3 Implication and interpretation are distinct.
Implied terms are often divided into two categories: terms which are implied in fact and terms which are implied in law. They may also be classified as “individualised implied terms” and “standardised implied terms” respectively.4 Standardised implied terms are implied into all contracts of the same type, and are not based upon the intention of the parties—presumed or otherwise.5 Individualised implied terms, by contrast, are generally explained by reference to the intentions of the parties; this helps to justify why the written agreement can be disturbed.
This article will focus upon individualised implied terms. Before analysing Belize, it is necessary to outline the “traditional” approach to implied terms. It is against this
* Fellow of Gonville and Caius College, Cambridge. The author would like to thank Neil Andrews and Richard Nolan. However, all views expressed, and any errors, remain the author’s own.
1. [2009] UKPC 10; [2009] Bus LR 1316; [2009] 2 All ER (Comm) 1.
2. The groundwork for this assimilation had already been laid: see, eg, Equitable Life Assurance Soc v. Hyman [2002] 1 AC 408; [2001] Lloyd’s Rep IR 99; A Kramer, “Implication in fact as an instance of contractual interpretation” (2004) 63 CLJ 384.
3. For example, if a term to take reasonable care were to be implied into a contract, such a term would still need to interpreted and its meaning ascertained. Cf Durham Tees Valley Airport Ltd v. BMI Baby Ltd [2009] EWHC 852 (Ch); [2009] 2 Lloyd’s Rep 246, discussed infra, text to nn 60–64.
4. Equitable Life v. Hyman [2002] 1 AC 408, 458–459; [2001] Lloyd’s Rep IR 99, 106, per Lord Steyn.
5. Crossley v. Faithful & Gould Holdings Ltd [2004] EWCA Civ 293; [2004] 4 All ER 447, [33–46]; E Peden, “Policy concerns behind implication of terms in law” (2001) 17 LQR 459. Good examples of standardised implied terms can be found in the Sale of Goods Act 1979, ss 12–15.
RECENT DEVELOPMENTS IN THE LAW OF IMPLIED TERMS
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