implied vs express terms

Question 1

What is an express term in a contract?

Answer 1

An express term is one which the parties have expressly agreed will form part of their contract.

Question 2

What is an implied term in a contract?

Answer 2

An implied term is one the parties have not agreed upon but which the court adds into the contract in limited circumstances.

Question 3

What did Lord President Dunedin say about contract formation in Muirhead and Turnbull v Dickson (1905)?

Answer 3

Contracts depend on what people say, not on their internal thoughts. Words used must be understood in their ordinary meaning, and unusual terms must be clearly communicated.

Question 4

What is the presumption about written agreements under Contract (Scotland) Act 1997, s1(1) and (2)?

Answer 4

A complete written document is presumed to contain all the express terms of the contract, though this can be rebutted by evidence of additional terms.

Question 5

What is the effect of an ‘entire agreement’ clause under CSA 1997, s1(3)?

Answer 5

It conclusively states that the document is the entire agreement, so no evidence of other express terms outside the document is allowed.

Question 6

Does an entire agreement clause exclude implied terms?

Answer 6

No, CSA 1997 refers only to ‘express’ terms, so courts may still imply terms. See Burnside v Promontoria (Chestnut) Ltd [2017] CSOH 157.

Question 7

Do statements of opinion form part of a contract?

Answer 7

No, they are generally not considered terms or representations. See Flynn v Scott (1949), where saying a car was in “good running order” was treated as opinion.

Question 8

How does the timing of a statement affect whether it is considered a term or representation?

Answer 8

The closer a statement is made to the agreement being reached, the more likely it will be considered a term of the contract. (Bannerman v White (1861))

Question 9

How does the importance of a stated fact influence whether it is considered a term?

Answer 9

The more important it is that the fact is true, the more likely it is to be considered a term. (Couchman v Hill [1947])

Question 10

Does Scots law distinguish between conditions and warranties?

Answer 10

No, unlike English law, Scots law does not divide terms into conditions and warranties. (Stair Memorial Encyclopaedia, Obligations, para 697)

Question 10

How does the expertise of the person making a statement affect whether it is a term?

Answer 10

If the party making the statement has special knowledge or skill and the other party relies on it, the statement is more likely to be a term. (Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965])

Question 11

How does the absence of a reference to an oral statement in the final written agreement affect its classification?

Answer 11

If an oral statement is not referred to in the final written agreement, it suggests the statement was not intended to be a term. (Routledge v McKay [1954])

Question 12

Are invoices and receipts generally considered contractual?

Answer 12

No, invoices and receipts are generally not considered contractual. (Buchanan & Co v MacDonald (1895), McCutcheon v MacBrayne 1964)

Question 13

What is required for sufficient notice of terms to be considered given?

Answer 13

Sufficient notice depends on the nature of the condition and the facts of the case. The greater the impact of the condition, the greater the notice required. (Grayston Plant Ltd v Plean Precast Ltd 1976)

Question 14

How does the suggestion to verify a statement’s accuracy affect its classification as a term?

Answer 14

If verification is suggested, the statement is likely not a term. If verification is not needed, it may be a term. (Ecay v Godfrey [1947], Hopkins v Tanqueray (1854))

Question 15

What is the ‘red hand’ test for sufficient notice of contractual terms?

Answer 15

The more unreasonable the clause, the greater the notice required, potentially needing red ink with a red hand pointing to it. (Spurling Ltd. v Bradshaw [1956])

Question 16

How are ticket contract terms viewed in *Parker v South Eastern Railway Co (1877)?

Answer 16

In Parker v South Eastern Railway Co (1877), the customer is bound by the terms noticed near the machine, not on the ticket, as the contract concludes when payment is made.

Question 16

When must notice of terms be given for them to be incorporated into the contract?

Answer 16

Notice must be given before the contract is concluded; after conclusion, it is ineffective. (McCutcheon v MacBrayne, Thornton v Shoe Lane Parking Ltd)

Question 17

How does Thornton v Shoe Lane Parking Ltd (1971) affect ticket contracts?

Answer 17

In Thornton v Shoe Lane Parking Ltd (1971), the contract is made when the customer pays, so terms must be noticed before payment; the ticket comes too late.

Question 18

How can the intention to create legal relations be proven?

Answer 18

In Olley v Marlborough Court Hotel Ltd (1949), intention can be proven through a written document, a prominent notice, or an oral stipulation before or at the time of the contract.

Question 19

Do auction notices form part of the sale contract?

Answer 19

Yes, in W N White & Co Ltd v Dougherty (1891), notices placed in front of an auctioneer’s lectern are considered part of the contract.

Question 20

Can workplace notices form part of an employment contract?

Answer 20

Yes, in Wright v Howard Baker & Co (1893), workplace notices can be incorporated into the employment contract.

Question 21

How are terms from previous dealings incorporated into a contract?

Answer 21

In McCutcheon v MacBrayne Ltd (1964), terms from prior dealings can be incorporated even without specific notice if the parties have consistently contracted under those terms.

Question 22

When can terms be implied from a course of dealing?

Answer 22

In McCutcheon v MacBrayne Ltd (1964), terms may be implied if there has been a consistent course of dealings, but the facts must support it.

Question 23

How does signing a document impact contract terms in L'Estrange v Graucob Ltd (1934)?

Answer 23

In L'Estrange v Graucob Ltd (1934), signing binds the signer to the terms, regardless of whether they’ve read them.

Question 24

Does signing always incorporate terms into a contract?

Answer 24

No, in Montgomery Litho Ltd v Maxwell (1999), unusual or onerous terms must be specifically brought to the signer’s attention.

Question 25

What is 'shrink wrap' contracting?

Answer 25

In Beta Computers (Europe) Ltd v Adobe Systems Ltd (1996), 'shrink wrap' contracting occurs when a customer agrees to terms by opening a product package and using the product.

Question 26

What is 'click wrap' contracting?

Answer 26

'Click wrap' contracting is when a user clicks to accept terms and conditions on a website, as seen in cases like Amazon and Ticketmaster.

Question 27

What are the two broad categories of implied terms?

Answer 27

Implied in law: Terms automatically included in certain contracts (e.g., sale, hire, employment). Implied in fact: Terms added based on what the parties would have agreed if considered.

Question 28

How do Scottish courts view implied terms?

Answer 28

Scottish courts follow the distinction between implied terms as expressed in Burnside v Promontoria and Unicorn Tower v HSBC, in line with Marks and Spencer plc v BNP Paribas.

Question 29

What does the Sale of Goods Act 1979 imply in contracts of sale?

Answer 29

Goods must match the description (S13). Goods must be of satisfactory quality (S14). Goods must be fit for a particular purpose if communicated (S14(3)). Goods must comply with the sample and be defect-free (S15).

Question 30

How did Lord Neuberger distinguish implied terms in Marks and Spencer plc v BNP Paribas?

Answer 30

Implied terms are either based on express contract terms and common sense, or imposed by law for certain relationships.

Question 31

What terms are implied by the Supply of Goods and Services Act 1982?

Answer 31

Service must be performed with reasonable care and skill (S13). If no timeframe is agreed, the service must be completed in a reasonable time (S14).

Question 32

What does the Consumer Rights Act 2015 apply to?

Answer 32

The Act applies to contracts between a trader and a consumer, where the consumer is acting for purposes outside their trade, business, craft, or profession.

Question 33

What are the implied terms for goods under the Consumer Rights Act 2015?

Answer 33

s9: Goods must be of satisfactory quality. s10: Goods must be fit for a particular purpose. s13/14: Goods must match a sample or model.

Question 34

What remedies are available if goods don't comply with the Consumer Rights Act 2015?

Answer 34

s19-24: Short-term right to reject, right to repair/replacement, right to a price reduction, and final right to reject.

Question 35

What does Lord McLaren say about implied conditions in William Morton & Co v Muir Bros & Co (1907)?

Answer 35

Implied conditions are based on universal custom or the nature of the contract, and should be assumed unless expressly excluded.

Question 35

What are the implied terms for services under the Consumer Rights Act 2015?

Answer 35

s49: Services must be performed with reasonable care and skill. s51: If no price is agreed, a reasonable price must be paid. s52: If no time is agreed, the service must be performed within a reasonable time.

Question 36

What is an example of an implied term based on reasonable time?

Answer 36

In contracts where no time is specified, an implied term requires performance within a reasonable time (e.g., Burnside v Promontoria (Chestnut) Ltd [2017]).

Question 37

What implied term applies to insurance companies regarding repairs?

Answer 37

Insurance companies are expected to repair a car within a reasonable time (e.g., Davidson v Guardian Royal Exchange Assurance 1979).

Question 38

What implied term applies to landlords with veto powers over tenants?

Answer 38

A term is implied that landlords will exercise their veto power reasonably (e.g., Scottish Tourist Board v Deanpark Ltd 1998).

Question 39

When can an implied term based on commercial practice or custom apply?

Answer 39

When the practice is certain, uniform, and notorious within a trade, the term can be implied into the contract without needing formal inclusion (e.g., Strathlorne Steamship Co v Baird & Sons 1916).

Question 40

What limits the application of implied terms based on custom or practice?

Answer 40

These terms are tightly confined to the specific trade or region where the custom is applied (e.g., William Morton & Co v Muir Bros & Co 1907).

Question 41

What are the three main approaches courts use to decide if a term should be implied in fact?

Answer 41

Objective Approach: What would the parties have agreed if they had considered the matter. Business Efficacy Test: The term is necessary to make the contract work. Officious Bystander Test: The term must be so obvious that the parties would have naturally agreed to it.

Question 42

What is a modern example of a case involving implied terms by custom and usage?

Answer 42

Ivey v Genting Casinos UK Ltd [2017] UKSC 67, where the court held that gambling contracts contain an implied term against cheating.

Question 43

How does the Objective Approach to implying terms work?

Answer 43

The term is implied if it is something any reasonable person would want for protection, and no reasonable counterparty would object to it (e.g., Morton v. Muir Bros 1907).

Question 44

What is the Business Efficacy Test?

Answer 44

A term will only be implied if it is necessary to make the contract work, based on the parties’ presumed intention (e.g., M'Whirter v Longmuir 1948 SC 577).

Question 45

What did Lord Jamieson state about the Business Efficacy Test?

Answer 45

A term will only be implied if its nature is such that it must be necessary to give the contract business efficacy (e.g., M’Whirter v Longmuir 1948 SC 577).

Question 46

How does the court avoid overstepping the intentions of the parties in the Business Efficacy Test?

Answer 46

Courts must not stray too far from the intentions of the parties, as the implication arises from their presumed intention to give the contract the necessary efficacy (e.g., Crawford v Bruce).

Question 47

What is the Officious Bystander Test?

Answer 47

A term can be implied if it is so obvious that it goes without saying—something the parties would agree to without needing formal expression (e.g., Shirlaw v Southern Foundries [1939] 2 KB 206).

Question 48

What does the Officious Bystander Test suggest about implied terms?

Answer 48

The implied term must be so clear and certain that an “officious bystander” suggesting it would be rejected by the parties with a common “Oh, of course!” (e.g., Shirlaw v Southern Foundries 1939).

Question 49

How did Marks and Spencer plc v BNP Paribas [2015] treat the tests for implying terms?

Answer 49

This case disapproved of Lord Hoffman’s approach and reaffirmed the BP Refinery approach, suggesting that the business efficacy and officious bystander tests can be alternatives—only one needs to be satisfied to imply a term.

Question 50

What does Lord Bramwell’s opinion in Auld v Glasgow Working Men’s Provident Investment Building Society (1887) suggest about fairness in contracts?

Answer 50

Lord Bramwell stated that it is wrong to set aside a contract on the grounds of fairness or equity when the parties have made a defined bargain.

Question 51

When can a contractual term be considered ineffective due to unfairness?

Answer 51

Under certain statutory provisions, such as the Consumer Rights Act 2015 (CRA) and Unfair Contract Terms Act 1977 (UCTA), unfair terms may be rendered ineffective in certain types of contracts.

Question 52

What does the Consumer Rights Act 2015 (CRA) say about unfair terms in consumer contracts?

Answer 52

Under the CRA, a term in a consumer contract is not binding if it is unfair, causing a significant imbalance to the detriment of the consumer. However, the consumer can still choose to rely on it.

Question 53

What does the Unfair Contract Terms Act 1977 (UCTA) say about exemption clauses in non-consumer contracts?

Answer 53

UCTA controls exemption clauses in business contracts, stating that they cannot exclude or limit liability for death or personal injury resulting from negligence.

Question 54

What does Section 17 of UCTA cover regarding standard form contracts?

Answer 54

Section 17 of UCTA states that an exemption clause in a standard form contract will not be enforceable if it is unfair or unreasonable to incorporate into the contract.