Malcolm ZoppiWed Oct 25 2023

Understanding Express and Implied Terms of a Contract

Understanding the difference between express and implied terms is crucial, as they both have legal implications and play a significant role in shaping the business landscape in the United Kingdom.

express and implied terms of a contract

Contracts are legally binding agreements that establish the rights and responsibilities of the parties involved. The terms of a contract dictate the scope of the agreement and the obligations of each party. Two types of terms are commonly used in contracts – express and implied terms.

Express terms are those that are directly stated and agreed upon by the parties involved, either in writing or verbally. Implied terms, on the other hand, are not expressly stated but are inferred and understood to be part of the contract.

Understanding the difference between express and implied terms is crucial, as they both have legal implications and play a significant role in shaping the business landscape in the United Kingdom.

Key Takeaways

  • Contracts entail express and implied terms that determine the scope of the agreement and the obligations of each party.
  • Express terms are directly stated and agreed upon by the parties involved, while implied terms are inferred and understood to be part of the contract.
  • Understanding express and implied terms is crucial in navigating the intricacies of contractual agreements and protecting the rights and interests of the parties involved.
  • Both types of terms have legal implications and play a significant role in shaping the business landscape in the United Kingdom.
  • Businesses should seek legal advice to ensure compliance with these terms and establish mutually beneficial working relationships.

The Distinction between Express and Implied Terms

Contracts are the foundation of business dealings in the United Kingdom, and expressions of the terms agreed upon form an essential part of a contract. These terms could be express, which are explicitly agreed upon by both parties, or implied, which are not explicitly agreed upon, but are necessarily inferred from the nature and circumstances of the agreement.

The terms of a contract could take various forms, whether it be a simple written or verbal agreement. However, it is crucial to understand the difference between express and implied terms, as the legal consequences of each could vary.

The Meaning of Express Term

An express term is a term that is explicitly agreed upon by the parties involved. It could be a written or verbal agreement that outlines the rights and duties of each party. These terms are usually incorporated into a contract by means of a written document or spoken words.

Express terms could be classified into primary terms, which are essential to the agreement, and secondary terms, which are not central to the agreement. Primary terms could include price, delivery, and description of the goods or services being exchanged, while secondary terms could include the place and time of delivery.

The Meaning of Implied Term

Implied terms are terms that are not explicitly agreed upon by the parties involved, but are necessarily inferred from the nature and circumstances of the agreement. Implied terms could arise in two ways – they could be implied in fact, meaning that they are intended by the parties to be a part of the contract, or implied by law, meaning they are necessary for the contract to operate effectively.

Implied-in-fact terms arise where the parties have not expressly addressed a particular term, but there is sufficient evidence to support its existence. For instance, if a supplier has always delivered goods on a specific delivery route, this route would be taken as an implied term in the contract.

Implied-by-law terms, on the other hand, are terms that are not expressly agreed upon but are essential for the contract to operate effectively. These terms are not subject to negotiations, and they arise as a result of common law or legislation.

The distinction between express and implied terms of a contract is critical, as it could have legal and practical implications. Understanding these differences ensures that each party to a contract knows precisely what their rights and obligations are, which, in turn, helps to minimise conflicts and disputes.

Implied Terms in a Contract: Understanding their Nature and Origin

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Implied terms are terms that are not explicitly stated but can be inferred from the circumstances surrounding a contractual agreement. These terms arise when they are necessary to give business efficacy to the contract and to give effect to the parties’ intentions.

There are two main categories of implied terms: those implied in fact and those implied by law. Implied terms that are implied in fact are not expressly stated in the contract, but can be inferred from the conduct of the parties and the nature of the business relationship. On the other hand, terms that are implied by law are those that are imposed on the parties by the law and are not dependent on the parties’ intentions.

The inclusion of implied terms in a contract is important because it helps to establish the rights and duties of both parties involved in the contract. The terms may address issues such as the quality of goods or services provided, the timing of payment and delivery, and the responsibilities of each party.

It is worth noting that implied terms are just as legally binding as express terms and are considered an integral part of the contractual terms. As such, it is important for parties to be aware of the existence and implications of such terms in their contractual agreements.

Express and Implied Terms in Employment Contracts

Employment contracts are a fundamental aspect of the UK business landscape, governing the relationship between employers and employees. Such contracts, whether written or not, contain a mix of express and implied terms.

An express term is a contractual term that has been explicitly agreed upon by both parties, either in writing or verbally. These terms arise from negotiations between the employer and employee and may cover various aspects of the employment relationship, such as working hours, salary, and job duties.

On the other hand, an implied term is a term that is not expressly stated in the contract but is nonetheless understood to form part of it. These terms arise either through custom and practice or by operation of law. They are presumed to be part of the contract, as they are necessary to give business efficacy to the employment relationship.

Implied terms may arise in a number of ways. Some terms may be implied in fact, meaning that they are necessary to give effect to the parties’ intentions. For instance, if an employee has been consistently receiving a bonus payment without any indication that it is discretionary, the bonus payment would be an implied term of the employment contract. Other terms may be implied by law, such as the duty of the employer to provide a safe working environment for the employee.

Both express and implied contracts are an integral part of the employment contract. Express terms ensure that all parties understand the terms of the contract, while implied terms provide necessary legal protection and define the expectations of both employers and employees. Express terms typically arise during the negotiation of the contract, while implied terms may arise later during the course of the employment relationship.

It is important to note that both express and implied terms have legal consequences. Breach of an express term can give rise to a claim for breach of contract, while breach of an implied term can have serious statutory implications for the employer. Therefore, it is crucial that both parties are familiar with the terms of the contract and seek legal advice if necessary.

Excluding and Interpreting Express and Implied Terms

Once expressed or implied terms have been established in a contract, it is important to understand how they can be excluded or interpreted.

In some cases, parties may decide to exclude certain terms from the contract. This can be done explicitly, for example, by stating that a particular implied term will not apply. Alternatively, it can be done implicitly, based on the nature of the agreement or the conduct of the parties. If a term is excluded, it will not form part of the contract and cannot be enforced by either party.

Interpretation plays a critical role in determining the scope and meaning of contractual terms. It involves assessing what the parties intended the terms to mean, based on the language used and the context of the agreement. The courts may also take into account factors such as custom and practice, previous dealings between the parties, or the commercial purpose of the contract.

In interpreting express terms, the focus is on giving effect to the parties’ intentions as expressed in the contract. In interpreting implied terms, the courts will seek to determine the intention of the parties from the circumstances of the case and the presumed legal requirements.

Excluding implied terms can be more difficult than excluding express terms, as they arise by operation of law rather than being explicitly agreed upon. To exclude an implied term, parties must demonstrate that they intended to do so, either by express agreement or by conduct that is inconsistent with the term.

It is important to bear in mind that the exclusion or interpretation of contractual terms can have significant consequences for the rights and obligations of the parties involved. Seeking legal advice can help ensure that any exclusions or interpretations are done correctly and in compliance with the law.

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The Legal Consequences of Express and Implied Terms

Understanding the legal consequences of express and implied terms is vital in establishing the rights and responsibilities of both employers and employees in a contractual agreement.

Express terms give each party a clear understanding of their legal rights and obligations. In contrast, implied terms are terms that may not be explicitly stated in the agreement, but are imposed by the law or custom and practice. These implied terms are fundamental in shaping the relationship between the parties involved and should not be overlooked.

Employers must ensure that they meet the implied terms imposed by law, including providing a safe working environment, not making unlawful deductions from wages, and providing adequate notice of termination. Failure to meet these terms may result in legal action being taken against the employer.

Similarly, employees also have duties and obligations under implied terms, such as providing notice of resignation and carrying out their work with reasonable care and skill.

It is important to note that the statutory rights of employees cannot be excluded by any express term of a contract. Employers must comply with all the relevant statutory provisions, including those relating to discrimination, minimum wage, and working hours.

The wording of both express and implied terms will be interpreted by the courts based on the parties’ intentions, as well as custom and practice of the relevant industry. If there is any ambiguity in the wording of a term, then the courts will interpret it in a way that is favourable to the party that did not draft the contract.

It is recommended that parties seek legal advice when drafting or entering into a contract to ensure that all terms are compliant with the law and are clear in their meaning. This will help avoid any misunderstandings or disputes, and provide a solid foundation for a successful business relationship.

Conclusion

Understanding the distinction between express and implied terms and their legal implications is vital for businesses navigating the complex landscape of contractual agreements in the UK. It is essential to recognise the importance of including express terms in a contract and understanding how implied terms arise and operate.

For employers, it is crucial to ensure that employment contracts include both express and implied terms to establish clear rights and responsibilities for both parties. Knowing how to exclude and interpret express and implied terms can also be essential in avoiding legal disputes.

By seeking legal advice and maintaining awareness of the latest statutory regulations, businesses can protect their interests and establish mutually beneficial working relationships with their partners and employees. Understanding express and implied terms is a key aspect of achieving this goal, and all parties involved should prioritise this aspect of their contractual agreements.

FAQ

What are express and implied terms of a contract?

Express terms are the clearly stated terms in a contract that both parties have agreed upon. Implied terms, on the other hand, are not specifically mentioned but are implied by law or custom.

What is the distinction between express and implied terms?

Express terms are explicitly stated in the contract, while implied terms are not directly stated but are understood to be part of the agreement.

What are implied terms in a contract?

Implied terms are terms that are not expressly stated but are still considered to be part of the contract. They can be implied in fact (based on the circumstances and intentions of the parties) or implied by law (imposed by legislative or common law rules).

How do express and implied terms relate to employment contracts?

Express terms in employment contracts are the specific provisions agreed upon by the employer and employee. Implied terms, on the other hand, are the terms that are implied based on legislation, custom, or the nature of the employment relationship.

How can express and implied terms be excluded or interpreted?

Parties can explicitly exclude certain terms from a contract. When it comes to interpretation, the parties’ intentions, custom and practice, and legal rules are taken into account to determine the meaning of the terms.

What are the legal consequences of express and implied terms?

Express and implied terms establish the rights and responsibilities of the parties involved in a contract. They can determine the duties of employers towards employees and may have statutory implications. Seeking legal advice is important to ensure compliance with these terms.

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Disclaimer: This document has been prepared for informational purposes only and should not be construed as legal or financial advice. You should always seek independent professional advice and not rely on the content of this document as every individual circumstance is unique. Additionally, this document is not intended to prejudge the legal, financial or tax position of any person.

Disclaimer: This document has been prepared for informational purposes only and should not be construed as legal or financial advice. You should always seek independent professional advice and not rely on the content of this document as every individual circumstance is unique. Additionally, this document is not intended to prejudge the legal, financial or tax position of any person.

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Get the specialist support you need

Whether you require specialised knowledge for your business or personal affairs, Gaffney Zoppi can support you.