How are terms incorporated into a contract? At first it looks like a silly question, because we’d usually expect them to be explicitly included in the contract. Express terms are terms that have been specifically mentioned and agreed by both parties at the time the contract is made. They can either be oral or in writing.
However, sometimes a term which has not been mentioned by either party will nonetheless be ‘included’ in the contract, often because the contract doesn’t make commercial sense without that term. Terms like this are called implied terms, and there are two main types:
Terms implied by statute: the Sale of Goods Act 1979. The key provisions are:
Section 12: the person selling the goods has to have the legal right to sell them.
Section 13: if you’re selling goods by description, e.g. from a catalogue or newspaper advert, then the actual goods have to correspond to that description.
Section 14: the goods must be of “satisfactory quality” – that is, they should meet the standard that a reasonable person would regard as “satisfactory”. Also, if the buyer says they’re buying the goods for a particular purpose, there’s an implied term that the goods are fit for that purpose.
Section 15: if you’re selling the goods by sample – you show the customer one bag of flour and they order 50 bags – then the bulk order has to be of the same quality as the sample.
Terms implied by the courts…
As a matter of fact. Something that’s so obviously included that it didn’t need to be mentioned in the contract. If I agree to pay you £50 for a lawnmower, it probably wouldn’t occur to us to write down that we mean fifty pounds sterling, as opposed to any other sort of pound. That’s obvious to both of us. (Beware of this point – it has to have been obvious to both parties – it’s not enough to show that one party thought it was included, or that the contract would have been more reasonable with the added term.)
As a matter of law. This is about general considerations of public policy – the courts are laying down, as a matter of law, how the parties to certain types of contract ought to behave. For example, in one case, the courts held that landlords of blocks of flats ought to keep the communal areas (lifts, stairs etc) in a reasonable state of repair – so that term was implied into the rental contract.
Customary terms. Some terms are generally known to be included in contracts in a particular trade or locality. Amongst bakers, “one dozen” means thirteen – they don’t have to include terms in every contract specifying that.
Do note that any of these terms implied by the courts can be excluded with an express term. If a bakers contract has a clear term in it that says “one dozen means twelve for the purposes of this contract”, then the courts can’t say that a dozen has to equal thirteen!
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