Implied terms

In contract law, implied terms are those that are not expressly stated in the contract but which are nonetheless implied by the contract. These terms may be implied by custom or usage, by the parties’ course of dealing with each other, or by statute. In some cases, an implied term may be necessary to make the contract workable or to give it a commercial result.

While many contracts will contain express terms that lay out the duties and obligations of the parties, there may also be some implied terms. These are often not written down anywhere but can be just as important in giving both parties a clear understanding of their rights and responsibilities.

There are three main types of implied term: those arising from custom or usage; those arising from the parties’ course of dealing with each other; and those that are statutorily implied. Each type of implied term will have a different legal basis and will be subject to different rules.

Custom or usage-based implied terms will typically only be found in contracts relating to goods or services that are traded in a particular market or sector. They can often be vital in making sure that the contract works properly and achieves its commercial objective. For example, in a contract for the sale of goods it might be customary for the seller to deliver the goods to the buyer’s premises, so an implied term to this effect could be found in the contract even if it is not expressly stated.