Effects Of Contracts

Question 1

Cue Card 1: Context – Implied Terms in English vs. French Law

Answer 1

English Law
Well-developed rules on implying terms (prominently featured in contract textbooks).
Courts use tests like business efficacy, custom, etc. (e.g., Liverpool City Council v Irwin).
French Law
Rarely distinguishes between “express” and “implied” terms.
Courts focus on interpretation to find the parties’ common intention.
Pothier: customary clauses are automatically “understood” in the contract (e.g., standard warranties).
Jersey Law
Adopts the English approach for implied terms (while using French concepts in other areas like vices cachés).
Key modern cases: Sibley v Berry, Grove v Baker, Smith v Jersey Oak, Murray v Camerons Limited.

Question 2

Cue Card 2: The Three Situations for Implied Terms (from Liverpool CC v Irwin)

Answer 2

Established Usage (Custom)
If it’s a known customary practice in that type of contract, the court may imply it.
Necessity / Business Efficacy
If the contract is “unworkable, futile, or absurd” without the term, it may be implied.
Unstated Party Intention
Where parties left a gap, the court fills in terms they clearly must have intended (so long as it does not contradict express terms).

Question 3

Cue Card 3: Leading Jersey Cases

Answer 3

Sibley v Berry (Court of Appeal)
Indefinite loan agreement with repayment only upon sale of property.
Held: No implied term for repayment on demand or forcing a sale.
The arrangement wasn’t absurd without such a term – it matched the parties’ intention.
Grove v Baker (Royal Court)
Commercial loan silent on principal repayment date.
Held: Implied term that the principal was repayable on demand (business efficacy in a commercial context).
Smith v Jersey Oak
Lease to run a business on plaintiff’s property. Plaintiff wanted an implied term it be done “with respect.”
Held: No need to imply such a vague standard; absence didn’t render the contract unworkable.
Murray v Camerons Limited
Confirmed Grove v Baker is a “main case” for implied terms, but still uses the same fundamental tests from Liverpool CC v Irwin.

Question 4

Cue Card 4: Additional Examples from Jersey Case Law

Answer 4

Osmand v Wood (Construction Contracts)
Implied that work is done in good time, properly, using reasonable care.
Medway v Earl of Jersey
Implied term that equipment (mower) supplied would be fit and safe for use.
Cunningham v Sinel (Legal Services)
Implied term of reasonable skill and care in providing professional services.
Hotel Savoy v Destinations Specialists
“No secret profits” implied in an agency-like arrangement (though mainly a fiduciary duty).
Izodia Plc v RBS Intl Ltd
Implied term that a bank uses reasonable skill and care in executing customer orders.

Question 5

Cue Card 5: Statutory Implied Terms

Answer 5

Supply of Goods and Services (Jersey) Law 2009
Automatically implies terms regarding fitness for purpose, satisfactory quality, etc.
These are essentially statutory warranties rather than purely court-implied terms.

Question 6

Cue Card 6: Key Takeaways

Answer 6

English Framework
Jersey courts rely on the same approach as English law for implying terms (custom, necessity, shared intention).
Cannot Contradict Express Terms
Courts will not imply a term that goes against the contract’s stated wording.
High Threshold
If the contract can function without the proposed term, courts likely won’t imply it.
Statutory Overlay
Separate from case law, certain implied warranties arise by virtue of Jersey legislation in goods/services contracts.