How did the Supreme Court restate the test for terms implied in fact?

Marks and Spencer plc v BNP Paribas Securities Services Trust Co [2015] restated the traditional requirements of necessity and obviousness. Lord Neuberger stressed that reasonableness alone is never enough.

What approach did Attorney General of Belize v Belize Telecom [2009] suggest?

Attorney General of Belize v Belize Telecom [2009] suggested that implication is part of interpreting the instrument. Marks and Spencer later warned against treating that as a relaxation of the test.

Why will a court refuse to imply a term merely because it is reasonable?

Implying a reasonable term would let the court rewrite the parties' bargain. The test is necessity, not improvement of the contract.

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Contract: Express and Implied Terms

Terms implied by fact and by custom

3 things to know
Components 2 and 3

Overview

Implied term, business efficacy test and officious bystander test.

What you need to know

Answer each one before you reveal it.

Your recallNot started

Key term

What is an implied term?

Numbers

What is the business efficacy test?

Numbers

What is the officious bystander test?

Questions from this subtopic

Each one with the model answer underneath.

1
What is an implied term?
Model answer
An implied term is one not stated by the parties but read into the contract. Implied terms may come from the courts, from custom, or from statute.
2
What is the business efficacy test?
Model answer
The Moorcock (1889) implied a term that a jetty mooring would be safe for the vessel. A term is implied where it is necessary to give the contract business efficacy.
3
What is the officious bystander test?
Model answer
Shirlaw v Southern Foundries [1939] asked what the parties would say to an officious bystander suggesting the term. A term is implied where both would testily reply that it goes without saying.
4
How did the Supreme Court restate the test for terms implied in fact?
Model answer
Marks and Spencer plc v BNP Paribas Securities Services Trust Co [2015] restated the traditional requirements of necessity and obviousness. Lord Neuberger stressed that reasonableness alone is never enough.
5
What approach did Attorney General of Belize v Belize Telecom [2009] suggest?
Model answer
Attorney General of Belize v Belize Telecom [2009] suggested that implication is part of interpreting the instrument. Marks and Spencer later warned against treating that as a relaxation of the test.
6
Why will a court refuse to imply a term merely because it is reasonable?
Model answer
Implying a reasonable term would let the court rewrite the parties' bargain. The test is necessity, not improvement of the contract.

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