The Practical Lawyer


Contract – implied terms

The SC has confirmed that it will imply a term into a contract to give it business efficacy.

The facts of the case were quite simple. A developer mentioned to his neighbour that he was having difficulty in selling the remaining flats in a development. The neighbour contacted an estate agent who in turn contacted the developer, told him he was an estate agent and that his commission would be 2%. A meeting at the flats was arranged and a buyer was introduced by the estate agent. The agent informed the developer of the agreement to buy and attached his terms of business to an email. The sale completed and the estate agent tried to claim his commission. The developer refused to pay.

The SC held that the parties had intended to create a legally binding contract by their words and actions. In the course of events on the sale of a property it is understood that the agent’s commission will become due on completion and would be payable from the proceeds of sale. The SC therefore did not feel it necessary to imply a term into this particular agreement because the terms were already clear – the estate agent found a buyer for the developer’s property and had told him beforehand what it would cost for him to do so. However, the key point is that the SC said that it would have ‘no hesitation’ in implying a term to give business efficacy to the agreement had it proved necessary to do so.

The case confirms that courts will imply terms that are obvious to give business efficacy to an agreement and that context is important. See Wells v Devani [2019] UKSC 4.


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