76 5: Content of contracts Part B The law of obligations
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It may be agreed to sell at the open market price on the day of delivery, or to invite an arbitrator to
determine a fair price. The price may be determined by the course of dealing between the parties.
Where an agreement appears vague or incomplete, the courts will seek to uphold it by looking at the
intention of the parties. If the parties use standard printed conditions, some of which are inappropriate,
such phrases may be disregarded.
Nicolene v Simmonds 1953
The facts: The claimant offered to buy steel bars from the defendant. A contract was made by
correspondence, in which the defendant provided that 'the usual conditions of acceptance apply'. The
defendant failed to deliver the goods and argued that there had been no explicit agreement.
Decision: The words should be disregarded. The contract was complete without these words; there were
no usual conditions of acceptance.
2.2 Implied terms
Terms may be implied by the courts, by statute or by custom.
There are occasions where certain terms are not expressly adopted by the parties. Additional terms of a
contract may be implied by law: through custom, statute or the courts to bring efficacy to the contract.
Implied terms may override express terms in certain circumstances such as where they are implied by
statute.
An implied term can be defined as follows.
'A term deemed to form part of a contract even though not expressly mentioned. Some such terms may
be implied by the courts as necessary to give effect to the presumed intentions of the parties. Other terms
may be implied by statute, for example, the Sale of Goods Act.'
2.2.1 Terms implied by custom
The parties may enter into a contract subject to customs of their trade. Any express term overrides a term
which might be implied by custom.
Hutton v Warren 1836
The facts: The defendant landlord gave the claimant, a tenant farmer, notice to quit the farm. He insisted
that the tenant should continue to farm the land during the period of notice. The tenant asked for 'a fair
allowance' for seeds and labour from which he received no benefit because he was to leave the farm.
Decision: By custom he was bound to farm the land until the end of the tenancy; but he was also entitled
to a fair allowance for seeds and labour incurred.
Les Affreteurs v Walford 1919
The facts: A charter of a ship provided expressly for a 3% commission payment to be made 'on signing the
charter'. There was a trade custom that it should only be paid at a later stage. The ship was requisitioned by the
French government and so no hire was earned.
Decision: An express term prevails over a term otherwise implied by custom. The commission was
payable on hire.
Key term
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