Why Do Courts Imply Terms into Contracts

In legal contracts, there are sometimes terms that are not explicitly stated, but rather are inferred or implied by the courts. This practice is known as “implied terms” and can occur for a variety of reasons.

Firstly, implied terms can be used as a way to fill gaps in a contract that are left open to interpretation. If there is a term that is not clearly defined, the courts may imply a term that makes sense in that situation. For example, if a contract specifies that one party will provide “reasonable assistance” to the other, but does not define what constitutes “reasonable”, a court may imply a term based on what is considered reasonable in the specific industry or context.

Secondly, implied terms can be used to ensure that contracts are fair and balanced. If one party has significantly more bargaining power than the other, the courts may imply terms to level the playing field. For example, if a supplier contracts with a large retailer, the courts may imply a term that ensures the supplier is paid a fair price for their goods, rather than being taken advantage of by the retailer.

Finally, implied terms can be used to reflect societal expectations and values. The law evolves over time to reflect changes in society, and the courts may imply terms that are consistent with those changes. For example, if a contract specifies that an employee will work 40 hours per week, but does not specify any other conditions, the courts may imply terms such as the right to breaks, vacation time, or overtime pay, as these are now considered common and expected in many industries.

In conclusion, courts imply terms into contracts for various reasons, including filling gaps in contracts, ensuring fairness and balance, and reflecting societal expectations and values. Implied terms can play an important role in ensuring that contracts are enforceable, and that parties are held to account for their obligations. Therefore, it is important for those entering into contracts to understand the concept of implied terms and consult with legal experts when necessary.