implied

• The Officious bystander test:

  Shirlaw v Southern Foundries Ltd [1939]

  "Prima facie, that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying"
• Liverpool City Council v. Irwin [1977] AC 239

  • D was leasing a flat from C, who owned the freehold of the tower block in which D lived
  • C sued D for unpaid rent and possession of the flat
  • D claimed C breached by refusing to maintain common parts of the building (Implied term)
  • CA held that there was no such implied term (Nor was officious bystander test satisfied)

  Lord Denning MR dissented

  • His Lordship said that C was under an implied duty to take reasonable steps to ensure common parts were fit for use by tenants, because this was a reasonable term
• Liverpool city council v Irwin [1977]

  Crucially, HL held that the basis of implication of terms in law was necessity, not reasonableness.

  • It was necessary for such a term to be implied, because such tenancy agreements could not work without the landlord having an obligation to maintain the common areas, unless the lease expressly placed the obligation on the tenants
• A TERM CAN BE IMPLIED IN FACT (SPECIFIC TO EACH CASE) OR IMPLIED IN LAW (GENERAL RULE FOR ALL CONTRACTS OF A CERTAIN TYPE E.G. EMPLOYMENT CONTRACTS).

  OFFICIOUS BYSTANDER TEST AND BUSINESS EFFICACY TEST ARE REGARDING TERMS IMPLIED IN FACT
• Officious bystander test

  If the parties were making their bargain and an officious bystander were to suggest express provision of a term, the parties would suppress him with a common "of course."
• Business efficacy test

  Can the contract "work" without the term

  Can the contract serve its "business purpose" without the term
• Business efficacy test

  Moorcock [1889]

  D was held liable for breach of an implied term to take reasonable care to ensure the safety of the riverbed for C's vessel

  • parties knew that exercise of the contract necessarily entailed the grounding of the ship
  • thus, the court held that there must be an implied term that D would take reasonable care to ensure safety of the riverbed
• As per Lord Neuberger (in [2015] UKSC 72): Only one test needs to be satisfied