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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 7 189 1. an implied term that a contract of employment may be terminated on reasonable notice; 2. the equity of redemption of a mortgagor; and 3. the covenant of quiet enjoyment in a lease. Note that in all of these cases the implied term, or legal or equitable right, is a protection of the presumed weaker party in the relationship: 1. an employee; 2. a mortgagor; or 3. a tenant. Terms that are customary in a trade or business are generally thought to be so well known that “of course” such terms are included in the contract. In the third category, implying a term into a commercial contract does not often raise an issue of an imbalance of bargaining power but does raise the more basic issue of fairness. Fairness is usually a matter of perspective. Perspective can (to mangle a metaphor) be an unruly horse because perspectives tend to be relative. The task of the court to determine the “intention” of the parties is said to be an objective assessment, not a subjective process. However, deducing the “intention” of parties from the words of the contract and the surrounding circumstances is not always an easy task. The term “business efficacy” (which is an essential test) is not one that can be defined with precision other than by examples of what may or may not fall within the concept. About all that can be said is that it clearly must be linked to the specific contract into which a term is sought to be implied, as stated in M.J.B. Enterprises.5 The difficulties that the tests for implying terms into contracts raise have been highlighted by recent case law in the United Kingdom. A decision of the Privy Council on implied terms (Attorney General of Belize v. Belize Telecom6) was described by the United Kingdom Supreme Court (in Marks and Spencer PLC v. BNP Paribas Securities Services Trust Company (Jersey) Limited7) as a “characteristically inspired discussion” of the issue but not one to be taken as authoritative.8 In the Privy Council, Lord Hoffman had taken the view that implying a term into a contract was part of the process of construction of the contract. It was first necessary to determine whether the issue in dispute was dealt with in the contract and then, if not, whether it was appropriate to imply a term. In the Supreme Court Lord Neuberger, on the other hand, disagreed with Lord Hoffman that implying a term was part of the construction of a contract. Lord Neuberger said that “construing the words used and implying additional words are different processes governed by different rules.” He concluded that implying a term was something to be considered


March Pages 2017
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