Implied term

A term which is later determined to have always formed part of a contract even though the parties did not consciously or expressly include it. Such terms may be implied with reference to presumed and actual intention, actions of the parties, the factual circumstances, fairness, and efficacy of the contract. Terms may be implied even in contracts where an entire contract clause has been used. Terms will not be implied where the parties expressly excluded them, or where a potential implied term would contradict express terms.

There are several ways that a term may be implied into a contract:

1. By fact: terms that were intended to be part of the agreement but were not expressly stated. These terms may only be included where they are necessary to give business efficacy. They implication must reasonable and equitable, so obvious that it ‘goes without saying’, be capable of clear expression, and not in contradiction with any express terms.

2. By law: terms that the law automatically implies in defined categories of contracts. Terms will only be implied where they could work in all contracts of the same category, and where necessary to protect the rights of a party to the contract.

3. By custom or trade: terms that are considered to constitute ‘standard practice’ in a particular industry or market.

4. By past dealings: terms may be implied to an informal contract where the parties to the contract have a recurring business relationship that is consistent, regular, and uniform.

5. By statute: terms may be implied to a contract where the law requires that contracts of that type be performed in a specified manner.