Understanding Implied Contract Terms

The assignment delves into the concept of implied terms within contracts. It explains the distinction between expressed and implied terms, highlighting three types of implied terms: those based on custom, facts surrounding the agreement, and legal requirements. The document uses case law examples to illustrate each type of implied term and concludes by emphasizing the importance of both expressed and implied terms in shaping contractual obligations.

Contract Law

TABLE OF CONTENT
QUESTION 1...................................................................................................................................1
1(a) Explaining the contracts, all essentials of contracts between Avinash and Cafe............1
ISSUE..............................................................................................................................................1
RULE...............................................................................................................................................1
APPLICATION...............................................................................................................................2
CONCLUSION................................................................................................................................3
QUESTION 2...................................................................................................................................4
Discussing the statements to cases and legislation providing examples of each...................4
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
CONCLUSION................................................................................................................................6
BIBLIOGRAPHY............................................................................................................................7

QUESTION 1
1(a) Explaining the contracts, all essentials of contracts between Avinash and Cafe.
ISSUE
The local cafe which offers drink and food products to its customers that too also on self
services bases. In this self services type customers need to order food or drink from available
menu which would be displayed on touch screen then they need to select their food. That screen
also displays whether they need ot take their food home or eat it there only after selecting the
order they need to pay money to cashier counter and wait for their order to come. This way cafe
would be saving lot of time during the rush hours and there would also be no misunderstanding
as well and order will be delivered to customer.
Avinash is a regular customer of that cafe who on regular base daily order cappuccino
which cost $4. One morning for the first time he ordered Danish party with his regular
cappuccino which both costed $7.5. He gave the order through the touch screen and also gave
the money to cashier on counter after that he was waiting for his order. After he received his
order he consumed his cappuccino and the moment when he took the bite of pastry which he has
ordered for the first time. He found a piece of metal which was there within the pastry and
because of which he broke his tooth. After that he complained this to management and demanded
compensation for his dental repair but the management refused to do so. As the ticket which he
had received there was a clause which stated that “This cafe accepts no responsibility or liability
for any injury caused to customer by consumption of food and drink sold.”
RULE
In the above case of Avinash v Cafe it is a clear case of negligence of the cafe. The above
case in which it is duty of cafe to serve correct and safe food ot all its customers and if customers
are injured cafe is only responsible for it. Cafe is found liable to give compensation to Avinash
who got injured with the consumption of metal into his pastry. In this case there was an act of
negligence from cafe as they could by stating anything on ticket could stay away from their duty
towards customers. In this case:
Negligence- this is an act of failure to behave according ot care level towards someone with
whom anyone is in contract with. As in the above case both Avinash and cafe came under the
contract which was applicable after payment to cafe by Avinash. So according to the case law of
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DONOGHUE V. STEVENSON (1932)1 cafe is also liable to compensate Avinash. As he found
a metal piece while he was consuming pastry in cafe for which he had already paid. His tooth
was broken after the consumption it was the responsibility of cafe to provide him safe and
healthy food. This was the act of negligence from the side of cafe which they were hiding by
giving per statements that they would not be liable for any such case. Avinash could take civil
actions against cafe if because of café's negligence he got injured. As there was contractual
arrangement between both of them after the sale and purchase of food items as Avinash had
already paid for his pastry and cappuccino. Since Avinash had purchased the pastry by his own
and was also having bill for his purchased as an evidence so he could held the cafe and its owner
liable to pay him for his injury.
Duty to take care- it is the duty of cafe to provide its customer with safe and proper food items
which are not containing any foreign objects into food. Cafe need ot follow the country's health
regulations and if they found violating the safety regulations like having foreign objects which
could be stones, pebbles, glass or any other metal. This could easily harm the consumer and
courts are very strict on this rule of safety regulations. As seen in the case of DONOGHUE V.
STEVENSON (1932) in which Stevenson was found liable for the health issues which were
caused to Donoghue. However, she did not purchased ginger beer so she could not sue Stevenson
but he had breached duty of care towards his customers and this caused injury to one of the
customer Donoghue.
APPLICATION
In the above case of Avinash v cafe this rule is applicable as cafe is found guilty of not
following the health and safety regulations. This is under Australian Consumer Law (ACL) as
sellers are not allowed to sell the food products that are either contaminated or containing any
foreign objects. If the seller is found guilty then they will be liable and responsible to
compensate consumer for their loss. So cafe was liable to pay off the compensation causing harm
to Avinash for dental treatment. By giving the statement at the back side of ticket or bill will not
be safeguarding cafe of their duty of care for their customers.
1. [1932] AC 562, HL
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CONCLUSION
From the above case of Avinash v Cafe it is concluded that cafe although had already
stated that they would not be liable ot any harms caused to their customer. Then also they will
have to compensate Avinash for his broken tooth which was caused after consuming pastry
which contained a metal piece within. This was the case of negligence and duty of take care from
side of cafe towards their customers who were coming in cafe.
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QUESTION 2
Discussing the statements to cases and legislation providing examples of each.
INTRODUCTION
Both expressed and implied terms in contract are of importance to contract or that to
agreement which will be whether stated or not into agreement. In contrast to express terms found
in contract implied terms could arise in variety of ways and are beneficial to at least one of the
parties to contract.
MAIN BODY
Expressed terms-
They are those terms and conditions which are laid down and in written form before the
contract between two parties have been done. They are generally specifically stated or orally told
at the time when both the parties are coming to contract. They basically include pay, working
hours and leaves or holidays etc. The breach of any of the expressed terms within contract invite
legal actions from the side of claimant. These expressed terms are generally those which are
articulated before entering into contract like the pre contractual statements. Like if anyone is
selling his old motorbike stating that it was previously owned and manufactured in year 2012
and if this statements comes false after the sale. These pre contractual statements are distinguish
as term of contract which is also the remedy of breach of contract as in case of Ellul & Ellul v
Oakes2. This could also be part of misrepresentation under section 18 of ACL providing a range
of remedies for misleading during trade and commerce. As in this above stated case where Ellul
purchased a house from Oakes in 1972 stating that house was sewered. But after that Ellul found
that it was not sewered and claimed for damages for breach of contract.
Whereas there are some terms which are not discussed by either of the two parties and
they are considered to as expressed. These are the terms which are incorporated by exchange of
written terms like that of tickets and they must also be displayed before the contract is concluded
in case of Thornton v Shoe Lane Parking (1971)3. Under this case Thornton parked his car in
Shoe lane parking and he suffered personal injury due to Shoe lane parking faults. This
2 [1972]3 SASR 377
3. [1971] 2 QB 163
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expressed terms is also called to as provision in contract which is clearly, directly and
unmistakeably communicated to both parties either in written or verbal form. Under the
employment contract duties of employer and employee, location of employment, working hours,
basic salary (+) incentives, leave policies and period of probation are all part of expressed terms
of employment.
Implied terms-
Under this type of statements which are assumed by the court and need to be included
within contract as well. This terms are implied or assumed to be in existence on part of law or
court and thus both parties need to follow them. Parties are bound to act in a certain way which
will not be stated otherwise in the contractual agreement at the time of contract. Court will be
implying a certain act or circumstance to be implied term within contract which will be:
Terms implied through custom- this is as according to case of Hutton v Warren (1836)4 which
tells that there are some prevailing terms within trade which will be implied in contract of same
type of other trade.
Terms implied in fact- this under case of Shirlaw v Southern Foundries (1939)5 in which
officious bystander would have been presented at time of contract and those will be included in
contract with obvious agreement of both the parties.
Terms implied in law- as in case of Liverpool city council v Irwin (1977)6 under which law or
court will be defining some terms like that of customer and retailer or wholesaler only to protect
weaker party.
Implied term is also the mutual trust and confidence which both the parties are having
within themselves at the time of contract like in famous case of Commonwealth bank of
Australia v Barker (2014)7. Under the hiring of High Court of Australia they said that not all
contracts will imply duty of trust and confidence in employment. But the other implied duties
4. [1836] 1M & W466
5. [1939] 2KB 2016
6. [1977] AC 239
7 [2014] HCA 32
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will be included within the contract like the duty of good faith. That the term of good faith would
not be included as implied term unless that term of displaced by express terms of contract.
CONCLUSION
In will be concluded that expressed terms are those which will be either in form of
written or in verbal form within and at the time of contract. Thus, it could be said that terms and
conditions of payment and salary will be expressed into employment contract between employer
and employee.
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BIBLIOGRAPHY
http://lawgovpol.com/case-study-donoghue-v-stevenson-1932/
https://www.australiancontractlaw.com/cases/ellul.html
https://www.lawteacher.net/cases/hutton-v-warren.php
http://e-lawresources.co.uk/Liverpool-City-Council-v-Irwin.php
http://e-lawresources.co.uk/Shirlaw-v-Southern-Foundries.php
https://www.australiancontractlaw.com/cases/thornton.html
http://www.ags.gov.au/publications/express-law/el223.pdf
https://www.lawteacher.net/cases/negligence-duty-catchphrase
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