Pass the Ball–part 3

Unfair Contract Terms Act 1977

1977 CHAPTER 50

10 Evasion by means of secondary contract. E+W+N.I.

A person is not bound by any contract term prejudicing or taking away rights of his which arise under, or in connection with the performance of, another contract, so far as those rights extend to the enforcement of another’s liability which this Part of this Act prevents that other from excluding or restricting.

Explanatory provisions

11 The “reasonableness” test. E+W+N.I.

(1)In relation to a contract term, the requirement of reasonableness for the purposes of this Part of this Act, section 3 of the M6 Misrepresentation Act 1967 and section 3 of the M7 Misrepresentation Act (Northern Ireland) 1967 is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made.

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Implied Terms

Source: http://www.gillhams.com/articles/141.cfm

General Application to Contracts

The rule is of general application and terms may be implied into contracts of virtually any nature, involving arbitration, agency, building, technology licences, sales of goods, supply of services and real property. The implication of terms remains a matter of law for a court to decide with the guidance of established legal principle.

When Terms are implied into a Contract

Terms may be implied by the facts of a particular case, which are considered to reflect the parties’ intentions. The general principles are that an implied term must:

1. not contradict any express term of the contract

2. be reasonable and equitable

3. be necessary to give business efficacy to the contract, such that the contract cannot be effective without it

4. so obvious that it goes without saying, and

5. be capable of being clearly expressed.

The factual background at the time of formation of the contract is the relevant time to consider whether the parties probably had the term in mind but did not express it, but probably would have expressed it, had it arisen in the court’s view of fairness or policy.

We look forward to your reply on this matter, preferably within 14 days for an acknowledgement, another 14 for a reply, no more than 30 days at tops.

Signed