Terms implied in fact and in law (Contract terms)-FS

Question 1

Implied Terms

Answer 1

Terms not expressly agreed by the parties but imposed by law, custom, or courts, and are legally binding as if expressly stated.

Question 2

When is a term implied through a course of dealing?

Answer 2

When both parties have regularly and consistently contracted on those terms over a sufficient period.

Question 2

Types of Implied Terms

Answer 2

1. Implied in Fact (based on presumed intentions)
2. Implied in Law (standard obligations in defined relationships)
3. Statutory Implied Terms (inserted by Acts of Parliament)

Question 3

When is a term implied by trade custom?

Answer 3

When it reflects a well-known, certain, and accepted practice in a specific trade and is presumed to be intended by the parties.

Question 4

What is the ‘business efficacy’ test?

Answer 4

A term will be implied if it is necessary to make the contract workable — not just more convenient.

Question 5

What is the ‘officious bystander test’?

Answer 5

A term is implied if it’s so obvious that, had it been suggested, both parties would have replied: “Of course.”

Question 6

Terms Implied in Law

Answer 6

Standard obligations inserted into specific types of contracts (e.g., landlord-tenant, employment) regardless of party intentions.

Question 7

What limits the scope of implied terms in law?

Answer 7

They must be necessary to make the type of contract legally workable — no more than what is essential.

Question 8

What is implied by section 13(1) of the Sale of Goods Act 1979?

Answer 8

That goods sold by description must correspond with the description.

Question 9

What is implied by section 14(2) of the Sale of Goods Act 1979?

Answer 9

That goods sold in the course of business must be of satisfactory quality.

Question 10

Satisfactory Quality Checklist (s.14(2B))

Answer 10

1. Fitness for purpose
   
   2. Appearance and finish
   3. Freedom from minor defects
   4. Safety
   5. Durability

Question 11

What is implied under section 14(3) of the Sale of Goods Act 1979?

Answer 11

Goods must be fit for a particular purpose made known to the seller.

Question 12

What is implied by section 15 of the Sale of Goods Act 1979?

Answer 12

That goods sold by sample must match the sample in quality and be free of hidden defects.

Question 13

What does section 15A of the Sale of Goods Act 1979 do?

Answer 13

Converts a breach of condition to a warranty if the breach is so slight that rejecting the goods would be unreasonable.

Question 14

What is implied by section 13 of the Supply of Goods and Services Act 1982?

Answer 14

Services will be performed with reasonable care and skill.

Question 15

What is implied under section 14 of the 1982 Act if time isn’t fixed?

Answer 15

Services must be performed within a reasonable time.

Question 16

What is implied by section 15 of the 1982 Act if no price is fixed?

Answer 16

A reasonable price must be paid for the service.

Question 17

Consumer Rights Act 2015

Answer 17

Applies to contracts between traders and consumers, providing implied terms and statutory remedies for goods and services.

Question 18

What does section 9 of the CRA 2015 imply?

Answer 18

Goods must be of satisfactory quality.

Question 19

What does section 10 of the CRA 2015 imply?

Answer 19

Goods must be fit for any purpose made known by the consumer.

Question 20

What is the effect of section 11 CRA 2015?

Answer 20

Goods must match the description provided.

Question 21

Consumer Remedies for Non-Conforming Goods (CRA 2015

Answer 21

1. Short-term right to reject (s.22)
2. Repair or replacement (s.23)
3. Price reduction or final right to reject (s.24)

Question 22

What is the consumer right under section 49 CRA 2015?

Answer 22

Services must be provided with reasonable care and skill.

Question 23

What is the effect of section 50(1) CRA 2015?

Answer 23

Promises made in marketing or sales are binding terms if relied on.

Question 24

Consumer Remedies for Non-Conforming Services (CRA 2015)

Answer 24

1. Repeat Performance (s.55) 2. Price Reduction (s.56)

Question 25

What are the exceptions to the implied term under section 14(2) SGA 1979 (Satisfactory Quality)?

Answer 25

1. Known Defects: If the defect was specifically drawn to the buyer’s attention, the term does not apply (s.14(2C)(a)). 2. Inspection Rule: If the buyer examines the goods and ought to have discovered the defect, the term does not apply (s.14(2C)(b)).

Question 26

Hong Kong Fir Test (Applied to innominate terms)

Answer 26

Used to determine whether a breach of an innominate term is sufficiently serious to justify termination. The test asks whether the innocent party has been deprived of substantially the whole benefit of the contract.

Question 27

The contract is silent on road conditions, but Scottish Lorries had made clear they could only deliver if the road was in good condition. The lorries get stuck. Which implied term applies and why?

Answer 27

A term will likely be implied by business efficacy. The road being in good repair is essential to the contract’s performance. Without it, the contract would be unworkable.

Question 28

Hong-Kui told the trader he needed a waterproof smartwatch for running and diving. The watch breaks in rain. Which statutory term is breached and what is his remedy?

Answer 28

Breach of CRA 2015, s.10 – fitness for a stated purpose. Remedy: Short-term right to reject within 30 days, or repair/replacement, or price reduction/final right to reject under s.22–24.

Question 29

Dimitri signs a contract based on an advert promising a free plane ticket. The ticket is never delivered. What term is breached and what is his remedy?

Answer 29

Breach of CRA 2015, s.50(1) – advertising statements relied on by consumers form part of the contract. Remedy: Price reduction under s.56, as repeat performance is impossible.