The Foundations of Implied Terms: Logic, Efficacy and Purpose
S Degeling, J Edelman and J Goudkamp (eds), Contract in Commercial Law (Sydney, LawBook Co, 2016)
24 Pages Posted: 16 Dec 2016
Date Written: December 15, 2016
This paper reconciles the interpretative approach to the implication of terms in fact with the gap-filling, rule-based approach. It argues that the implication of terms in fact can properly be understood as an exercise in determining what a contractual instrument must mean, but it is necessary to ask why a contract must mean that an unarticulated solution is to be applied to resolve a particular problem. Answering that question affirms core elements of the traditional, rule-based approach to the implication of terms, but helps us to refine that approach, pointing towards a formulation that is both more precise and more comprehensive. The foundations of implied terms are logic (the implication is a logical inference from the language of the express terms), efficacy (a particular term is needed to make the contract work and represents a singularly apt solution to the problem in question) and purpose (a particular term is needed to prevent a contractual purpose from being defeated and represents a singularly apt solution to the problem in question).
Keywords: contract, implied terms, interpretation, construction
JEL Classification: K12
Suggested Citation: Suggested Citation