Now for some magic: this blog is about invisible clauses.
If your contract does not have enough terms to be workable, clauses can be added (implied) to make it work properly. They can be added as a result of:
(2) Laws or statutes
(3) Cases on a similar type of contract.
At their simplest, they provide the bare minimum that you would expect such as a term that goods will be of ‘satisfactory’ quality. Implied terms can also provide a range of remedies (eg for late payment the recipient can claim interest and suspend its duties on a construction project) or require specific behaviour such as the partners co-operating on a project.
It is not easy to know whether your contract will have terms added into it – even long standard form construction contracts like JCT, NEC3 or ICE are not immune.
What Does ‘As She Was’ Mean?
As the law will intervene to supplement the terms of your contract, you should try and avoid it by clearly recording the critical elements. Time, cost and quality are important across a wide range of contracts.
When buying something second-hand, what sort of quality are you expecting? The sale of a second-hand ship included a term that the ship was to be:
“delivered and taken over as she was at the time of inspection…However, the Vessel shall be delivered with her class maintained…without condition / recommendation, free from average damage affecting the Vessels class…”
On the way out out of the harbour, the ship broke down. That’s like my first car, when the exhaust fell off on the garage forecourt!
Understandably, the buyers were not amused and claimed compensation from the sellers.
The buyers argued that the ship was not of ‘satisfactory’ quality, as required by the Sale of Goods Act 1979. Where your contract does not make it clear what quality is agreed, this Act intervenes to provide a minimum standard.
The sellers argued that the term ‘as she was’ was a statement of quality and ‘satisfactory’ quality could not be implied. They said the ship was ‘sold as seen.’ Essentially, they fell back on the ‘buyer beware’ approach.
The court said that the reference to the ship being sold ‘as she was’ only referred to a promise that there should be no change between inspection and sale. It was not enough to exclude the implied term for satisfactory quality.
In your contract, you need to use clear words to explain the quality you expect to provide or receive.
If you have any terms and conditions you want me to review, comment on or revise, then drop me a line.
Case: Dalmare SpA v Union Maritime Limited and Valor Shipping Limited  EWHC 3537 (Comm)