Your Contract’s Hidden Terms: Implied By Custom

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 or practice (general, mercantile or local), be imposed by statute, or from decisions of the courts (known as case law).

Implied by custom

The best example of a clause ‘implied by custom’ is the baker’s dozen – which means 13.

A term can be implied by custom if, in a particular trade, there is:

a uniform… practice, so well defined and recognised that the contracting parties must be assumed to have had it in their minds when they contracted.

In Cunliffe-Owen v Teather the court said a term could only be implied if the practice was ‘notorious, certain and reasonable‘.

In the UK construction industry, there are few terms implied by custom – since 1879 we have used standard form contracts that incorporate clauses reflecting custom and practice. One case considered whether a price was exclusive of VAT. The court held that it was inclusive!

Remember, what’s custom to you may be surprising for others.

What you should do

Relax.

Cases:  Noreside Construction Ltd v Irish Asphalt Ltd [2011] IEHC 364, at paragraph 46. VAT: Lancaster v Bird (2000) 2 TCLR 136; Cunliffe-Owen v Teather [1967] 1 WLR 1421.

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