In this brief note we take a look at express and implied terms in commercial contracts, explaining when you might come across them and what you can do about them.
If, after reading this, you are unsure on what terms should go into your business contract or whether to exclude an implied term then you should seek legal advice. Our commercial contract solicitors are highly experienced in this area and can provide you with commercial and practical advice at all stages of the contractual process.
Remember, clarity is key!
When you’re asked to sign a contract on behalf of your business, you’d think it would be reasonable to assume that the contract contains all the commercial terms. However, contracts can contain both express and implied terms.
An ‘express’ term is a term of the contract between you and the other party, which is clear, unambiguous and agreed upon. It’s usually in writing but it can be verbal if the contract itself is verbal.
An ‘implied’ term is one that a court has implied into a contract because it has not been expressly included. This may be because the parties did not consider it, did not think that the issue would arise or simply omitted to include the term.
You’ll find express terms in the contract.
It’s unlikely that you’ll come across implied terms unless there has been some sort of court action and the court has found that an implied term exists, even though it does not appear in the written contract.
The express terms and any implied terms together create the legally binding obligations on the parties.
When something is found to be ‘missing’ from the express terms, a court can imply additional terms to ensure
It is obviously better to make all terms of the contract ‘express’ - as clear and comprehensive as possible to reduce the risk of a party arguing that there are additional implied terms.
Any form of exclusion, whether in a specific clause or in an entire agreement clause, needs to be clear and specific.
Again, clarity of the parties’ intentions is crucial, and best reflected in the express terms of a written contract.
Generally speaking, in the event of a conflict between an express term and an implied term, the express term will prevail.
The moral of the story is…. it is far better to rely on
Even if your business has an excellent working relationship with the other contracting party or your business has been consistently dealing with them for several years, do not under-estimate the importance of having a clear written contract in place with them.
Similarly, if the way that you work with the other contracting party changes, the terms of any existing contracts should be reviewed and updated to reflect the new relationship.
About our expert
Mairead is a Senior Commercial Solicitor with experience in general commercial law gained in private practice and working as an in-house counsel. She qualified in 2011.
