Implied Term

Terms in contracts can be express or implied. As a general rule, implied terms can not override express terms. However, sometimes it can be argued that although an implied term does not override an express term, the implied term is really evidence of a variation to the original contract rather than an implied term of the original contract itself.

Terms can be implied by:

1. Conduct

2. Officious bystander test. To pass this test, a term must be so obvious that an officious bystander looking at the facts would conclude that the parties intended the term to have contractual effect

3. Custom. To be implied by custom, the term must be reasonable (fair), notorious (well known, but not necessarily universal) and certain (precise).

4. Business efficacy. To pass this test the term must be necessary for the contract to work properly.

5. Characteristic terms. These are terms implied into all contracts of employment, for example the implied term of trust and confidence.