Last edited 15 Oct 2018

Express and implied terms in construction contracts

The rights and obligations of parties to a contract are defined by its terms. Express terms are those that have been explicitly agreed by both parties and can be oral or in writing.

However, the express terms do not necessarily constitute all the relevant terms of the agreement. In certain circumstances the courts are prepared to imply terms into a contract provided such terms are necessary to give business efficacy to the agreement.

The leading case on implied terms is The Moorcock case (1889). In that case Bowen LJ stated:

"Now, an implied warranty, or, as it is called, a covenant in law, as distinguished from an express contract or express warranty, really is in all cases founded upon the presumed intention of the parties, and upon reason. The implication which the law draws from what must obviously have been the intention of the parties, the law draws with the object of giving efficacy to the transaction and preventing such a failure of consideration as cannot have been within the contemplation of either side; and I believe if one were to take all the cases, and there are many, of implied warranties or covenants in law, it will be found that in all of them the law is raising an implication from the presumed intention of the parties with the object of giving the transaction such efficacy as both parties must have intended that at all events it should have".

Terms may be implied as a matter of law. That is to say they are implied as a matter of policy and are of general application to all contracts. Further terms may be implied as a matter of fact. That is to say as a matter of construction of the presumed intention of the parties to a particular contract. The case of Foley v Classique Coaches Limited (1953) is an illustration of a term being implied as a matter of fact.

Whilst a term will not be implied unless in the particular circumstances of each case it is reasonable to imply such a term, this does not mean that a term will be implied merely because it is reasonable. For example, Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board (1973) where the court refused to imply a term to render a harsh contract more reasonable.

Further, a term will not be implied if it is inconsistent with the express terms of the contract. In Martin Grant & Co Ltd v Sir Lindsay Parkinson & Co Ltd, the Court of Appeal refused to imply a term in a building subcontract:

‘that (a) the [main contractors] would make sufficient work available to the [sub-contractors] to enable them to maintain reasonable progress and to execute their work in an efficient and economic manner; and (b) the main contractors should not hinder or prevent [the sub-contractors] in the execution of the sub-contract works'

where the express conditions of the sub-contract provided for a 'beck and call' obligation on the sub-contractor; that is to say the sub-contractor was obliged to carry out his works '... at such time or times and in such manner as the [main contractor] shall direct or require'.