Are some things better left unsaid? A discussion on implied terms

By Sonia Ng

The legal principles governing the implication of terms in a contract are probably among the most settled. This, however, does not put an end to unsuccessful attempts by litigants to imply terms. In this article, we will briefly review the law on implied terms, see how the law was applied in a fairly recent English case involving a building contract and finally consider its relevance to us.

The formulation of the test for implying a term that the Hong Kong courts often quote is that provided by Lord Simon of Glaisdale in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1978) 52 ALJR 20, a Privy Council decision:

‘Their lordships do not think it necessary to review exhaustively the authorities on the implication of a term in a contract that the parties have not thought fit to express. In their view, for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that ‘it goes without saying’; (4) it must be capable of clear expression; and (5) it must not contradict any express term of the contract.’ …

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