Terms of Contract: Express and Implied Terms and Their Effect

Running Head: LAW
BUSINESS AND COMPANY LAW
Name of the Student
Name of the University
Author’s Note

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QUESTION 1:
The terms of the contract is one which determines the rights and liabilities of the parties
along with the consideration and its mode and the contractual obligation upon a party in return of
which the consideration is paid. The thesis aims to bring out the terms of the contract including
both the express terms and the implied terms and their effect upon the validity and enforceability
of the rights and obligations of the parties. The study also deals with the detailed analysis of
these terms of contracts in accordance with the given case study.
The terms of the contract is directly proportionate to the consent implied or expressed by
the other party meaning that the terms of the contract drives the consent of the other accepting
party1. Therefore, contract law is hugely dependent upon the terms of the contract which can
either be expressed or implied2.
The express terms of contract are those which are explicitly mentioned in the contract in
the written form and the contracting parties shall be bound to such terms in the legally
enforceable way. However, such terms cannot involve unlawful dignities3 like the person shall be
under the slavery of his her master (the other party) during the course of enforceability of
contract. Such provisions are capable of being disputed and hence, can be designated as unlawful
by the court. Thus, good faith and ubiquity are essentials of a rational contract and its rational
terms that shall be expressed in the terms of the contract4. Therefore, express terms of contract
can be explained as those terms which are expressed specifically in the terms of the contract and
1 Hampton, Jean. "Contract and consent." A companion to contemporary political philosophy (2017): 478-
492.
2 McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), 2014.
3 Fienman, Jay M. "The Duty of Good Faith: A Perspective on Contemporary Contract Law." Hastings
LJ 66 (2014): 937.
4 Campbell, David. "Good faith and the ubiquity of the ‘Relational’contract." The Modern Law Review 77.3
(2014): 475-492.

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these terms are binding upon the parties in their legal capacity depending upon the lawful nature
of the terms explicitly mentioned in the contract.
Implied terms of contract are those, which are based on the statutory provisions for the
assessment of rights and obligations of the parties. These rights include right to equal pay at
equal work, duty of care, duty of mutual trust and confidence and so on. The implied terms of the
contract include analysis of the major changes to the statutory interpretation of the rights and
duties of the contracting parties in their legal capacity5. These rights and obligations imply the
duty of good faith among the parties to act honestly for the fulfillment of their promise6.
Therefore, the implied terms of the contract can be explained as those terms which are initiated
based upon the legal capacity of the contracting parties and their legal rights and duties are
interpreted on the basis of the provisions of law.
In the given scenario, the contractual relationship between the shop and Caitlyn existed
when Caitlyn had ordered for the food and the beverage and paid for the same in exchange of the
bill. In other words, when she had entered into the shop, it constituted the invitation to offer and
when she offered to buy the beverage and the food and the Shoppe accepted the same and issued
her the bill in exchange of the money paid, the contract got enforced. However, the implied
terms of the contract included the duty of care initiated by the Shoppe towards Caitlyn as any
reasonable food manufacturer would have taken in terms of hygiene and care. When Caitlyn
found the metal piece in her food, the duty of care was breached by the food joint and the breach
resulted in the loss of her one tooth. This attracts the provision for the tort of negligence.
However, the explicit term of the contract stated that the Shoppe shall not be responsible for any
5 Austen-Baker, Richard. Implied terms in English contract law. Edward Elgar Publishing, 2017.
6 Carter, J. W., and Wayne Courtney. "Good faith in contracts: is there an implied promise to act
honestly?." The Cambridge Law Journal 75.3 (2016): 608-619.

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loss incurred due to consumption of food and beverage sold to the customers. Such provision
although explicit but is in conflict with the terms of common law principle as well as section 43
of the Wrong Food Act 1958 (Vic). It has also been laid in Donoghue vs. Stevenson7 that every
manufacturer or the seller holds duty of care towards the customers including the third party
consumers irrespective of the fact whether he or she paid the bill or not.
Therefore, it can be concluded that although explicit, such provision was unlawful in
nature and if claimed, Caitlyn would be entitled for the damages against the harm caused to her
due to the negligence of the Shoppe in addition to the liability imposed upon the Shoppe for
avoiding the statutory obligation by way of explicit expression of terms of the contract.
QUESTION 2 (a):
A contract is a set of lawful express terms and conditions along with consideration paid by one
party in exchange of the favor obliged by the other party as freely consented by them, laid down
in a written format between the parties and such agreement of terms and contracts shall be
legally binding upon the parties and be enforceable by law. According to McKendrick8, has been
explained that every contract is an agreement, however, every agreement is not a contract. It has
been explained that the agreement can be either enforceable or unenforceable by law based on
oral as well as written terms whereas, contract is specifically written format and enforceable by
law. Thus, five elements of contract has been identified by law of contracts9:
7 [1932] UKHL 100
8 McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), 2014.
9 Andrews, Neil. Contract law. Cambridge University Press, 2015.