Contract interpretation and implied terms

When contracting with third parties, business people should be aware of the implications of a recent decision in the High Court. The court held that, when deciding whether to imply a term into a contract, knowledge of well-known legal principles can be implied to the reasonable person, even if the actual parties were ignorant of them. To find otherwise would have allowed the tenants in this case to "benefit from a windfall that they neither intended nor expected".

Although the facts of this case were exceptional, the judgment lays down a clear principle about implying terms into contracts, which may also apply to the general process of interpreting contracts.

This checklist outlines the key issues a business should consider when negotiating contracts.

For further information, please contact our Business Law Team.


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