F. Terms implied at common law

Rather than being based on the intention of the parties, terms implied at common law are terms that the courts will imply in relation to particular types or classes of contract. Such terms are also referred to as "characteristic terms", because the law sees them as a necessary characteristic of a particular type of contract. Prior to their codification in statute, a large number of terms were implied into contracts for the supply of goods and services. Common law also implies terms into contracts for the carriage of goods, landlord and tenant and employment contracts. It is an implied term of an arbitration agreement that the arbitration is confidential (Ali Shipping Corporation v Shipyard Trogir [1997] EWCA Civ 3054). General trust law can also be relied on to imply terms into an inadequately documented trust arrangement (CRC Credit Fund Ltd and others v GLG Investments Plc Sub-Fund: European Equity Fund and others [2010] EWCA Civ 917).

G. Terms implied by statute

Terms are implied under various statutes and statutory instruments. Well-known instances of such statutes include the following.

Sale of Goods Act 1979

In contracts for the sale of goods, where the seller sells the goods in the course of business, the Sale of Goods Act 1979 implies a number of terms relating to the goods:

• A condition that the seller has the right to sell the goods and warranties that:

  • no third party has any rights over the goods which the seller has not disclosed to the buyer; and

  • the buyer will have quiet possession of the goods.

(section 12.)

• A condition that the goods conform to their description (section 13).

• A condition that the goods are of satisfactory quality meaning that they must meet the standard that a reasonable person would regard as satisfactory taking into account description, price, appearance, finish, freedom from minor defects, safety, durability and fitness for all normal purposes (section 14(2)(A)).

• A condition that the goods will be reasonably fit for any purpose expressly or implicitly made known to the seller (section 14(3)).

In addition to terms relating to the nature of the goods, if a sale of goods contract is silent on particular matters relating to the performance of the contract and there is no evidence of the parties’ intentions, the Sale of Goods Act will imply terms to bridge the gap. For example:

• Where no price for the goods is agreed, the price will be a reasonable one (section 8).

• Where no time for payment is stated, it is implied that the buyer must pay cash on delivery (section 28).

• Where no place for delivery is agreed, it takes place at the seller's place of business (section 29).

• Where no mention is made of when title in the goods passes to the buyer, it is deemed to pass when the goods become ascertained and the parties intend it to pass (sections 17 and 18).

The ability of the parties to exclude the above implied terms is governed by the Unfair Contract Terms Act 1977.

Supply of Goods and Services Act 1982

The Supply of Goods and Services Act 1982 applies to contracts for works and materials. In relation to materials, sections 3 and 4 of the Act imply the same terms as sections 13 and 14 of the Sale of Goods Act 1979 imply into sale of goods contracts. For the work element of the contracts, section 13 implies a term providing that the services will be carried out with reasonable care and skill.

The ability of the parties to exclude the above implied terms is governed by the Unfair Contract Terms Act 1977.

Commercial Agents (Council Directive) Regulations 1993

The Commercial Agents (Council Directive) Regulations 1993 (SI 1993/3053) considerably strengthen the position of commercial agents by implying terms into agency agreements and by giving rights which survive the termination of the agency agreement. They provide, for example, that the agent is entitled to compensation if the agency agreement is terminated and the agent is deprived of commission that he would have received if the agency agreement had been properly performed (regulation 17(7)).

Many of these statutory provisions cannot be excluded by the parties.

Working Time Regulations 1998

The Working Time Regulations 1998 (SI 1998/1833) restrict the number of hours an employee may work per week.

Law of Property (Miscellaneous Provisions) Act 1994

On a sale of assets, the Law of Property (Miscellaneous Provisions) Act 1994 implies certain covenants for title into the sale agreement, if the seller agrees to sell the assets with "full title guarantee" or "limited title guarantee".