LAW OF COMMERCE.

LAW OF COMMERCE 1
Law of Commerce
Author
Class (Course)
Professor (Tutor)
School (University)
City and State
Date

LAW OF COMMERCE 2
Jenny Vs Penny
Issue
Whether implied terms of the contract are binding even where they were not specifically
mentioned in the contract.
Rule of Law
A contract can have either express or implied terms. Express terms are those stated orally
or in writing by the parties. Implied terms are those deemed to form a part of the contract even
where they were not mentioned by any of the parties during the formation of a contract. The
three main methods terms can be implied is either by trade customs, statues, or the law. In
Codelfa Construction Pty Ltd v State Rail Authority of NSW, the Court explained the rules that
govern implied terms.1 The rules set were that for an implied term to be enforceable, it must be
reasonable, not violating principles of equity, need to be essential for the purpose of business
efficacy, it should be obvious, should be clear in its expressions, and should not contradict other
express terms.2In overall, these rules are mainly tested against the famous rule analysis of the
“officious bystander” as set in The Moorcock case.3
Application
As both Jenny and Penny are disputing about a term that is in Paris custom but was not
included in their contract, the court will weigh the disputed term against the rules which stated in
Codelfa Construction Pty Ltd v State Rail Authority of NSW.4 For example, in Wilson v Best
Travel, the court found it unreasonable to impose a term on the travel agent that all the hotels he
recommendation should be reasonably safe using the Britain standards. 5 However, looking at
1 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 337 149 CLR.
2 Ibid.
3 The Moorcock (1889) 64 14 PD.
4 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 337 149 CLR.
5 Wilson v Best Travel Ltd (1993) 1993 All ER 1.

LAW OF COMMERCE 3
Jenny and Peny’s case, they are all living in Paris so they share the same rules. Also considering
the explanation given in Byrne v Australian Airlines Ltd, the court stated that to find out whether
a term is implied is a matter of applying the "officious bystander" analysis.6 The test requires to
reason what someone not involved in the party’s contract would have thought about the disputed
term. If that person’s answer shows that it is obvious for such a term to be included, then the
court should imply that term. Looking at the facts in Jenny and Peny’s case, we are told that it
was a custom in the parish to have sample dresses delivered first. Applying these facts to the
bystander analysis, it is easier to see this is what everyone thinks and Peny should have done the
same.
Conclusion
Delivering samples of dresses was a practice in Paris, so this was an implied term that
Peny should comply with.
6 Byrne v Australian Airlines Ltd (1995) 410 185 CLR.

LAW OF COMMERCE 4
Bibliography
Byrne v Australian Airlines Ltd (1995) 410 185 CLR
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 337 149 CLR
The Moorcock (1889) 64 14 PD
Wilson v Best Travel Ltd (1993) 1993 All ER 1