Implied Terms: What is the Role of Construction?

Abstract

In Attorney General of Belize v Belize Telecom Ltd, the Privy Council reconceptualised the process of implying terms 'in fact' into contracts. Until then, the conventional understanding had been that factual implication was a matter of contract doctrine. A term was implied when it satisfied certain well-known tests such as the business efficacy test or the 'officious bystander' test. In Belize, factual implication was said to be a matter of elucidating the meaning of the contract: that is, it is merely part of the ordinary process of construction. In this article, we examine the relationship between 'implication' and 'construction', and between 'construction' and contract doctrine. We argue that the reasoning in Belize did not properly distinguish these concepts. The process of factual implication is distinctive; it cannot be treated simply as a matter of meaning, to be determined by ordinary construction principles.

Keywords: contract, implied terms, construction, Belize Telecom

JEL Classification: K10, K12, K30