My Musings on Construction Law Week:10A
What are the tests used in English Courts to determine whether a term is to be implied as averred by a Claimant ? Also briefly explained the development of these tests over the years.
I was requested by a reader to write a short post on the above as she was unsure on how to handle a dispute she had ……So here goes.
In all started in 1889 when the first judgement (or case law) was made as to the 1st test. Over time as new cases arose, additional tests were introduced and by 1978 they were crystallized through 5 mandatory tests. The 5 tests remain to this day unchanged or added.
In BP Refinery (Westernport Pty Ltd Vs Shire of Hastings (1978) 52 ALR 20, Lord Simon of Glaisdale took a collection of the tests developed over the years and summarized them into 5 mandatory rules. He ruled that if the 5 following criteria are fulfilled (some of which may overlapped), the term would be implied. The 5 tests are as follows: -
(i) if it is necessary to give business efficacy to the Contract ( The Moorcock (1889) 14 PD 64.
(ii) If it is obvious (S hirlaw Vs Southern Foundries Ltd (1939) 2 KB 206.
(iii) If it is not inconsistent with the express terms of the contract or its general tenor ( Lynch Vs Thorne (1956) 1WLR 303.
(iv) If it is capable of clear expression (S hell Ltd Vs Lostock Garage Ltd (1976) 1 WLR 1187.
(v) If it is reasonable and equitable ( BP Refinery Pty Ltd Vs Shire Hastings (1978) 52 AJLR 20.
The Supreme Court has lately reaffirmed the 5 mandatory tests in Marks & Spencer PLC Vs BNP Paribas Security Services Trust Company Limited (2015) UKSC 72.
Readers should be mindful that Contract Terms can be implied only if ALL the above 5 test can be strictly satisfied. The term will not be ruled as implied by the Courts if it is not so.
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