Your Contract’s Hidden Terms: Implied By Cases

However well-drafted your contract is, there are some terms you cannot avoid and which may be added into your contract. Implied terms can be added to your contract, without your knowledge.

They can arise from custom, be imposed by statute, or from decisions of the courts (known as case law), sometimes going back 150 years or more.

The difference between statutorily implied terms and case law is that court decisions cannot override the terms you have written in your contract. They have to fit ‘in between the gaps.’

Using implied terms

There are three ways of adopting implied terms into your contract:

  1. By staying silent on a matter:  if your contract says nothing at all, then terms can be implied (sometimes due to the nature of the contract)
  2. By making an oblique reference to the term imposed by statute or case law (see example below)
  3. By adding an express term which mirrors the implied term.

An oblique reference is best demonstrated by the design standard of care under JCT DB 2016 for the contractor:

… the same liability to the Employer, whether under statute or otherwise, as would an architect or other appropriate professional designer who holds himself out as competent to take on work for such design and who, acting independently under a separate contract with the Employer, has supplied such design for or in connection with works to be carried out and completed by a building contractor who is not the supplier of the design.

The meaning of this clause is not plain because you need to know what the liability of an architect or other designer is ‘under statute or otherwise.’

Implied design liability

All of the options for using implied terms are better if you know that that term would be.

for any services, whether that is contract administration, design, works, surveying etc, the implied liability (or duty) is to ‘use reasonable skill and care‘. This is not a very high standard. According to Bolam v Friern, a professional meets this standard if:

  • she is reasonably competent
  • based on industry standards or professional conduct rules at the time
  • in accordance with generally accepted industry practices (even if not everyone agrees with those practices).

A more poetic explanation of what is required …

Paragon, polymath or prophet?

“… a professional man should command the corpus of knowledge which forms part of the professional equipment of the ordinary member of his profession. He should not lag behind other ordinarily assiduous and intelligent members of his profession in knowledge of new advances, discoveries and developments in his field…He must bring to any professional task he undertakes no less expertise, skill and care than any other ordinarily competent members of profession would bring, but need bring no more. The standard is that of the reasonable average. The law does not require of a professional man that he be a paragon, combining the qualities of polymath and prophet.”

Staying on top of good practice and changes in your profession, by attending good quality training, seems to be just about all that is required on top of basic competency. Most clients are hoping for a little more than Ms Average when they appoint a professional.If that’s what you want, you’ll have to write it into your contract.

But often that is all your contract will require of you.

What should you do?

For employers: Decide if the implied standard is sufficient for your contract. If your provider has tendered on the basis of specialist services, then use the higher standard [read more]. If you prefer a more objective standard, then consider referring to specific deliverables.

For providers: Stay up-to-date including new advances such as BIM.

Cases: Bolam v Friern Hospital Management Committee [1957] 2 All ER 118; Bingham LJ, Eckersley v Binnie & Partners 1988 18 Con LR 1

(c) Image:Mark Holdgate. Used with permission.

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