FLK1 · Contract

Terms — express, implied, interpretation

SQE1 revision notes — the key rules, leading cases and common traps for this topic, in plain English and current to 2026.

CON.04 — Terms: Express, Implied, Interpretation

Term or representation?

A statement is a term (breach gives a contractual remedy) or a mere representation (only a misrepresentation claim). Factors: timing, importance attached, special knowledge/skill of the maker, and whether the statement was reduced to writing.

Routledge v McKay — long gap before contract suggested representation.
Oscar Chess v Williams (private seller, no special knowledge → representation) vs Dick Bentley v Harold Smith (dealer's skill → term).

Incorporation of express terms

Signature: bound even if unread (L'Estrange v Graucob), unless misrepresented (Curtis v Chemical Cleaning).
Notice: reasonable steps before/at contracting; the more onerous the clause, the greater the notice needed (Interfoto "red hand" rule; Thornton v Shoe Lane — ticket from machine, too late).
Course of dealing: consistent prior dealings (Hollier — too few/inconsistent failed).
Parol evidence rule: written contract presumed complete; rebuttable by collateral contract or partly-oral contracts.

Implied terms

By fact (to give business efficacy / officious bystander; The Moorcock; Marks & Spencer v BNP Paribas — strict necessity test, NOT reasonableness).
By law (incidents of a contract type, e.g. landlord/tenant: Liverpool CC v Irwin).
By statute — Sale of Goods Act 1979 (B2B/private: s.12 title, s.13 description, s.14 satisfactory quality & fitness for purpose, s.15 sample). Consumer Rights Act 2015 governs B2C: s.9 satisfactory quality, s.10 fitness, s.11 description, s.49 reasonable care/skill in services. Do not cite SGA for consumers — that is a classic trap.

Classification & interpretation

Condition (breach → terminate + damages), warranty (damages only), innominate term (remedy depends on seriousness of consequences — Hong Kong Fir). Time clauses in commercial sales often conditions (The Mihalis Angelos).
Construction: objective, contextual, business-common-sense approach (Investors Compensation Scheme; Rainy Sky; Arnold v Britton — but clear words prevail over commercial common sense; Wood v Capita — iterative).

Common traps

Term vs representation drives the whole remedy route.
Innominate terms ≠ automatic right to terminate.
CRA 2015 for consumers, SGA 1979 for non-consumers.
Implied-in-fact = necessity, never mere reasonableness.

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In January, a doctor negotiating the sale of his medical practice tells the buyer, truthfully, that the practice generates around £2,000 a month in income. Contracts are not signed until May. Between January and May the doctor falls seriously ill, stops practising, and the patient list collapses, so that by the time of signing the practice earns almost nothing. The doctor says nothing about this change. The buyer, still relying on the January figure, completes the purchase and then discovers the true position.

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