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March Pages 2017

THE ADVOCATE V O L . 7 5 P A R T 2 M A R C H 2 0 1 7 187 IMPLIED TERMS– THROUGH A LOOKING GLASS?1 By Richard Olson Courts have routinely implied terms, or declined to imply terms, into contracts to resolve disputes. Despite the tests articulated in various cases for implying a term into a contract, it is important to recognize that these tests are legal fictions designed to provide the illusion of an objective analysis for what is largely a subjective exercise. There is no handy formula into which the facts of a case can be plugged to spit out the answer, because these tests require a qualitative rather than a quantitative assessment. These tests are similar to the analyses developed for granting interlocutory injunctions and other discretionary orders. For example the three tests to be met for an interim injunction: 1. a fair question to be tried, 2. the balance of convenience, and 3. irreparable harm2 are rarely capable of precise measurement. Each factor involves a judgment of whether the facts fall on one side or other of the line. Ultimately, based on the judge’s assessment, if each feels “right” to the judge the order will be made. If not it will not be made. This is not of course an arbitrary assessment based on a judge’s personal preferences or biases but an application of a judge’s judgment based on the facts before the court.3 Whether the outcome sought by counsel “feels right” to the judge is often dependent on counsel’s effectiveness in articulating the facts and in how the judge applies the principles which are not always clearly described, or consistently explained, in the cases. In most cases the decision seems obvious but that is often because the facts have been laid out to make it so, though sometimes simply because the facts are so compelling. IMPLIED TERMS IN CANADA The Supreme Court of Canada has, in M.J.B. Enterprises Ltd. v. Defence Construction (1951),4 confirmed the longstanding test in Canada for implying a term into a contract:


March Pages 2017
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