Exploring Express and Implied Terms in Contract Law

In contract law, understanding the distinction between express and implied terms is crucial for interpreting obligations and rights of the parties involved. Express terms are explicitly stated in a contract, providing clear evidence of agreement. Conversely, implied terms, though not expressly included, are understood to be part of the contract based on statutory provisions, common law precedents, or business efficacy tests. This essay examines these concepts through case studies such as L'Estrange v Graucob and Shirlaw v Southern Foundries, illustrating how courts determine contractual obligations. By exploring both express and implied terms, this analysis highlights their significance in ensuring fairness and fulfilling the parties' intentions within legal agreements.

Running Head: ESSENTIALS OF CONTRACT
Essentials of contract
Name of the Student:
Name of the University:
Author Note

1ESSENTIALS OF CONTRACT
Table of Contents
Question One: Part A.......................................................................................................................2
Issue:............................................................................................................................................2
Rule:.............................................................................................................................................2
Application..................................................................................................................................4
Conclusion...................................................................................................................................5
Part B...............................................................................................................................................5
Issue.............................................................................................................................................5
Rule:.............................................................................................................................................5
Application:.................................................................................................................................6
Conclusion...................................................................................................................................8
Question Two: Implied and Express terms of a contract.................................................................8
Introduction..................................................................................................................................8
Implied Terms..............................................................................................................................8
Express Term...............................................................................................................................9
Type of Contract term existing in Question one........................................................................11
Conclusion.................................................................................................................................11
Bibliography..................................................................................................................................13

2ESSENTIALS OF CONTRACT
Question One: Part A
Issue:
It is to be stated that for a contract to be valid and legally binding upon the parties, it must
contain the basic essentials of a valid contract. In this case the essentials of a valid contract will
be discussed to analyze whether a valid contract had been formed between Avinash and the café.
Rule:
There are four important essentials that need to be present for the formation of a valid contract as
held in the case Pharmaceutical Society of Great Britain v Boots1. There has to be an offer. The
offer must be accepted on the terms of the offer. The parties to the contract must intend to create
legal obligation by entering into the contract2. There has to be a consideration present in the
contract.
Offer:
It can be said that an offer is the statement of expression which intends to create
contractual relationship and bind the parties by such relationship3. The person making the offer is
called the offerer and the person to whom the offer is made is called the offeree. It is to be
mentioned that for an offer to be effective, it has to be complete. An offer, as made by the offeror
cannot have indefinite and ambiguous terms4. It was held in the case AGC (Advances) Ltd v
McWhirter5 that if any of the terms of the offer is missing or incomplete the offer would merely
1 [1953] 1 QB 401
2 Wilkinson-Ryan, Tess, and David A. Hoffman. "The common sense of contract formation." Stan. L. Rev. 67
(2015): 1269.
3 McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), 2014.
4 Bayern, Shawn. "Offer and Acceptance in Modern Contract Law: A Needles Concept." Cal. L. Rev. 103 (2015):
67.
5 (1977) 1 BLR 9454

3ESSENTIALS OF CONTRACT
be treated as an invitation to treat. An important case which discussed the provision of invitation
to treat is the case Great Britain V Boots Cash Chemists ( Southern) Ltd (1953) 1 QB 401
Intention to Create Legal Relation:
It is to be mentioned that for a contract is considered to be an agreement which legally
binds the parties. It was held in the remarkable case Carlill v Carbolic Smoke Ball Company6
that the intention of the parties to create legal relations would be evaluated from the perspective
of a reasonable man acting in a similar situation as the plaintiff. It can be said that the court
assumes the parties to a commercial contract intend to create legal relations as held in the case
Esso Petroleum v Commissioners of Customs & Excise 7. An objectives test is to be applied to
judge whether there was intention of the parties to create legal relations as held in the case Carlill
v Carbolic Smoke Ball Company [1893]. However, the burden is on the party to provide contrary
evidence, who wishes to establish that such party did not intend to form legal relations8. Rebuttal
is only successful rarely as was held in the case Rose & Frank Co v Crompton & Bros Ltd.
Acceptance:
The principles of valid acceptance have been illustrated in the case R v Clarke9, in which
it was held that the acceptance must be in reliance of the terms of the offer. Acceptance is the
second step after the offer is made to the offeree. Acceptance of an offer can only be done by the
the person to whom the offer was made and on the exact terms of the offer. Any proposition to
change the terms of offer by the offeree would constitute counter offer and not acceptance10. The
6 [1893] 1 QB 256
7 [1976] 1 WLR 1
8 Shavell, Steven. "Damage measures for breach of contract." The Bell Journal of Economics (1980): 466-490
9 (1927) 40CLR 227
10 Bartling, Björn, and Klaus M. Schmidt. "Reference points, social norms, and fairness in contract
renegotiations." Journal of the European Economic Association 13.1 (2015): 98-129.

4ESSENTIALS OF CONTRACT
news of acceptance of the offer must be communicated by offeror to constitute valid acceptance
as held in the case Powell v Lee (1908) 99LT 284 and Felthouse v Bindley11.
Consideration:
Consideration in a contract is also an essential element. The Australian Common Law
considers Consideration to be a necessary element of contract. It is to be mentioned that
consideration is required to legally bind the parties12. The Price which is stipulated by the
promisor in return for the fulfillment of the promise is accepted to be the consideration. The
aforementioned provision was held in the case Carlill v Carbolic Smoke Ball case.13 Another
important case dealing with the different types of Consideration is Chappell & Co Ltd v Nestle
Co Ltd14. It was held in that case that the promisor is required to stipulate the consideration
amount.
Application
It can be said that in this given scenario the act of letting the customers choose the food
or beverage they want to consume from the virtual menu is merely an invitation to treat and not
an offer. This provision was discussed in the AGC (Advances) Ltd v McWhirter case15. The
act of displaying the menu from which the orders are to be placed to all the potential customers is
an invitation to treat. When Avinash placed the order from the menu the offer was made by him.
The café’s acceptance of Avinash’s offer constituted valid acceptance. In this case it can
be noted that Café accepted the offer of Avinash on the terms proposed by him. The news of
11 (1862) EWHC CP J 35
12 Hoffman, David A., and Zev J. Eigen. "Contract Consideration and Behavior." Geo. Wash. L. Rev. 85 (2017): 351.
13 [1893] 1 QB 256
14[1960] AC 87
15 (1977) 1 BLR 9454

5ESSENTIALS OF CONTRACT
acceptance of Avinash’s order by the café was successfully communicated to him by the
issuance of the printed ticket, which in this scenario is the proof of acceptance.
An objective is applied by the courts to determine whether the parties had actually
intended to create legal relations as held in the case Air Great Lakes Pty Ltd.16 Any person
reasonable in nature would have acted in the same way as Avinash did and would have intended
to create legal relationship. The communication of acceptance by the printed ticket ensured that
the Café also intended to create legal relations.
Consideration is necessary for a contract to be legally binding upon the parties as held in
the Carbolic Smoke ball case. In the scenario consideration can be held to be the price paid by
Avinash for consuming the food and beverage provided by the café.
Conclusion
In conclusion it can be said that a valid contract was formed between the aforementioned
parties and all the necessary elements of contracts were present.
Part B
Issue
It can be stated that the Australian Consumer Law governs the provisions for of consumer
rights when buying any goods or services. It is to be discussed in this chosen case study whether
Avinash is eligible in claiming damages from the cafe in relation to the provisions stated in
Australian Competition and Consumer Act 2010 (Cth) and whether the café can rely on the
exclusion clause.
16 [1989] 2 NSWLR 309

6ESSENTIALS OF CONTRACT
Rule: Implied terms and exclusion clause
The legal issue which is to be analyzed in this chosen case is the exclusion clause in a
contract. It is to be noted that exclusion is an express term in a contract which targets to restrict
or limit the liability of the party to a contract for non-fulfillment of the contract terms. The
notable case which deals with the general rule of exclusion clause is the L'Estrange v
Graucob17 case. It is to be mentioned that in the case Darlington Futures Ltd v Delco Australia
Pty Ltd 18 the court held that exclusion clauses in contract are required to analyzed in the same
way as any other contract term. There are two tests to analyze the exclusion clause I case of
unsigned documents. The first test assesses whether it is reasonably expected for the document to
contain contractual terms or does the document have an ulterior objective in the transaction as
held in the case Chapelton v Barry urban District Council [1940] 1 KB 532.
The second test assesses whether reasonable steps had been taken to intimate the
customer about the existence of an exclusion clause, the notice of the exclusion clause was given
to the parties at the time of contract formation and if it is possible to impose terms unilaterally on
the customers after the contract formation. In the notable case Thornton v Shoe Lane Parking
Ltd. 19 it was held that a mere representation of the exclusion clause at the back of the ticket will
not limit or restrict the liability of a party. An exclusion cause must be brought to the notice of
the other party prior or at the time of the contract formation as held in the case Olley v
Marlborough Court20.
17[1934] 2 KB 394
18(1986)161 CLR 500
19(1971) 1 All ER 686
20 [1949] 1 KB 532

7ESSENTIALS OF CONTRACT
However, for successful implementation of the exclusion clause it has to be incorporated
along with the other terms of the contract. Such exclusion clause must be brought to the attention
of the contracting parties prior to entering into the contract. Exclusion clause is ideally expected
to be effective in limiting the liability of either of the parties if it was present when the contract
was signed by the parties. In case of contract which is signed by the parties the exclusion clause
needs to exist in the documents containing the terms of the contract.
According to section 18 of schedule 2 of the Australian Consumer Law a person in trade
or commercial practice is prohibited from engaging in deceptive and misleading conduct.
Sections 51-59 of the aforementioned act deal with consumer guarantees in relation to supply of
goods. Section 54 specifically states that the goods or commodities purchased must be of
acceptable quality.
It is to be noted that sections 60-64 of the aforementioned act deal with the consumer
guarantees related to supply of services.
According to section 260 of the Australian Consumer Law a supplier or manufacturer
will have legal obligations if there is major failure to comply with consumer guarantees. A major
failure of goods can be defined as goods; which would not have been acquired by the consumer
had he been aware of the nature and extent of its failure, goods which differ from the description
or the demonstration model, goods which are unfit for the disclosed purpose, goods that are unfit
for consumption and of unacceptable quality.
Section 64A of the Competition and Consumer Act 2010(Cth) states that any change in
the terms of the contract is permissible in certain exceptional circumstances provided, such
change in the contract terms aim to provide remedy to the suppliers against the claims of

8ESSENTIALS OF CONTRACT
consumers due to the exclusion clause. However according to Section 64 of the Australian
Competition and Consumer Act 2010 (Cth), it can be said that remedies and warranties of
consumers cannot be taken away under any circumstance. Any attempt to do so would be
voidable.
Application:
A contract between the café and Avinash had been established between the
aforementioned parties in this scenario. The contract had formed when Avinash had placed the
order from the ordering menu and the café accepted such order on the terms of the offer. The
ticket issued to Avinash is the proof of successful acceptance. Now the question arising is
whether the exclusion clause was present at the time of contract formation. At the time of placing
the order he had not been intimated about any exclusion clause. He had no idea about any term in
the contract which could restrict the liability of the café.
Thus it can be said that according to the findings of the case Thornton v Shoe Lane
Parking Ltd21 the exclusion will not be effective it is merely represented at the back of a ticket.
Such clause will not limit the liability of the party. For an exclusion clause to be effective in case
of unsigned documents, it has to be one which would be assumed to be contained in the
document by a reasonable person Parker v SE Railway Co22. Further, sufficient notice of the
exclusion clause has to be given to the other party which is reasonable Thompson v LMS
Railway23. Therefore in this case exclusion printed at the back of the ticket would be considered
to invalid as it was not possible for a reasonable person to assume it, neither was any notice of
such clause given to Avinash prior or at the time of contract formation. If the exclusion clause
21 (1971) 1 All ER 686
22 (1877) 2 CPD 416
23 [1930] 1 KB 41

9ESSENTIALS OF CONTRACT
had been communicated to the parties prior to contract formation, the same would be treated as
primary contract terms as held in the case Darlington Futures Ltd v Delco Australia Pty Ltd.
Further it is to be stated that beverages and foods sold by the café are for personal consumption,
so any attempt to limit its liability will not be permissible by the law as discussed in section 64A
of the Australian Consumer and Competition Act 2010(Cth).
Conclusion
In conclusion it can be said that the café cannot avoid its liability for not taking due care
which affected the Avinash, the party to the contract. It cannot rely on the exclusion clause
printed at the back of the ticket to limit or restrict its liability. Avinash is therefore justified in
making the claim.
Question Two: Implied and Express terms of a contract
Introduction
The rights and obligations of the parties in a contract are governed by the terms of the
contract. It is to be mentioned that in every valid contract there are set of terms which are either
implied and express and the same are binding upon the parties.
Implied Terms
Implied terms are the conditions in a contract which are not clearly express neither agreed
upon by the parties24. Implied terms are the terms which are incorporated in the contract terms by
the statutory provisions and the court25. It is to be mentioned that an implied term is incorporated
or added in the terms of the contract if it is believed by the court that it is impossible to carry out
24 Parker, David, and Gerald Box. Business Law for Business Students 2008. Lawbook Company, 2008
25 Perry, Christina. "Good Faith in English and US Contract Law: Divergent Theories, Practical Similarities." Bus. L.
Int'l 17 (2016): 27

10ESSENTIALS OF CONTRACT
the other terms of the contract without implementation of such implied term26. The same was
held in the remarkable The Moorcock27 case.
A reasonable person is expected to assess the term of the contract in order to evaluate
whether there were any implied term in the contract. It was stated in the remarkable case
Shirlaw v Southern Foundries28 by the court that implied terms cannot be incorporated in the
contract terms because it is assumed to be fair. Terms of a contract which are considered to be
necessary to give effect to the intention of the parties are generally perceived as implied terms by
the common law. In the notable case Codelfa Construction Pty Ltd v State Rail Authority of
NSW29 it was held that common law may imply terms which are based on the presumed or real
intention of the parties and those which are required to be implied to provide efficiency in the
performance of the contract. In the aforementioned case the conditions necessary to imply terms
were discussed. It was held that such terms must be equitable and reasonable, obvious to the
extent that it goes without saying, clearly expressed and necessary to provide efficacy to the
contract. Such terms must not contradict any of the express terms of the contract
Express Term
Expressed terms in contract are those terms which are clearly stated in the contract and
agreed upon by the parties. Express terms can be written as well as oral. It is to be mentioned
that the express terms of contract are known to the parties prior to entering into such contract30.
The case Wilson v Best Travel31 deals with the provisions of the express terms of a contract
26
27 (1889) 14 PD 64
28[1939] 2 KB 206
29 (1982) 149 CLR 337
30 Parker, David and Box, Gerald, (author.) Business law for business students (Third edition). Pyrmont, N.S.W.
Lawbook Co, 2013
31 [1993] 1 All ER 353

11ESSENTIALS OF CONTRACT
It can be said that the terms of a contract have different degrees of importance. The
consequences for breaching them also vary according to the type of term and the importance
attached to such term.
A condition is a major contract term in a contract. It is to be stated that such contract term
is central to the meaning of the transaction. In case of breach of a condition of a contract the
innocent part can choose to repudiate the contract or sue damages from breach of such condition.
The case Poussard v Spiers & Pond32 discusses where a contract term can be treated as a
condition.
A warranty in is minor contract term which is less important than a condition. In case of breach
of such contract term the innocent party cannot repudiate the contract, however, such innocent
party may choose to claim damages and sue the party responsible for such breach. In the case
Bettini v Gye33, it was discussed where a contract term may be treated as a warranty.
In case of an exclusion clause existing along with the terms of the contract, such clause will aim
to limit the liability of one of the parties to the contract. Exclusion clause can exist in a written
contract. However, such clause can be incorporated in unsigned documents. Such exclusion
clause can be incorporated in dockets, tickets, signs, vouchers, signs and receipts.
The main difference between express terms and implied terms is that implied terms are
those terms which are not written in case of written contracts neither spoken in oral contracts but
are still binding upon the parties. They are either incorporated from past dealings as held in the
case Balmain New Ferry Co Ltd v Robertson34, or from industry practice as held in the case
32 (1876) 1 QBD 410
33 (1876) 1 QBD 183
34 (1906) 4 CLR 379

12ESSENTIALS OF CONTRACT
British Crane Hire Corp Ltd v Ipswich Plant Hire Ltd35 and to improve business efficacy as
held in the case ‘The Moorcock’36.
The implied terms can even be governed by Australian Consumer Law and are therefore known
as statutory implied terms.
It can be said that in question one both express and implied term were existent. The express term
included serving the food and beverage for the price paid for it. Such term can be considered to
be a condition. However, the food and beverage served by the café required to be of acceptable
quality as stated by section 54 of the Australian consumer law. Such term although not clearly
express but incorporated by the Australian consumer law as an implied term.
Conclusion
Thus, in conclusion it can be stated implied as well as express terms can exist in a
contract. Express terms are those which are clearly specified where and agreed upon by the
parties at the time of entering into the contract. However, implied terms of a contract are those
which assessed by the courts and statutes and those which are although not clearly express and
are essential for carrying out the other express terms. Thus analyzing both express as well as
implied terms, the terms of the contract in question one can be regarded to be as clearly express.
35 [1973] EWCA Civ 6
36 [18816- 1890] AA ER 530

13ESSENTIALS OF CONTRACT
Bibliography
Case laws:
AGC (Advances) Ltd v McWhirter(1977) 1 BLR 9454
Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd [1989] 2 NSWLR 309
Carlill v Carbolic Smoke Ball[1893] 1 QB 256
Chappell & Co Ltd v Nestle Co Ltd[1960] AC 87
Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500
Ellul and Ellul v Oakes (1972) 3 SASR 377
Hyde v Wrench[1840] EWHC Ch J90
L'Estrange v Graucob [1934] 2 KB 394
Shepperd v The Council of the Municipality of Ryde (1952) 85 CLR 1
Shirlaw v Southern Foundries [1939] 2 KB 206
Thornton v Shoe Lane Parking Ltd. (1971) 1 All ER 686
Wilson v Best Travel [1993] 1 All ER 353
Lillico & Sons Ltd [1969] 2 AC 31
Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401

14ESSENTIALS OF CONTRACT
British Crane Hire Corp Ltd v Ipswich Plant Hire Ltd [1973] EWCA Civ 6
Balmain New Ferry Co Ltd v Robertson (1906) 4 CLR 379
Bettini v Gye (1876) 1 QBD 183
Poussard v Spiers & Pond (1876) 1 QBD 410
‘The Moorcock’[18816- 1890] AA ER 530
Thompson v LMS Railway [1930] 1 KB 41
Parker v SE Railway Co (1877) 2 CPD 416
Chapelton v Barry urban District Council [1940] 1 KB 532
Powell v Lee (1908) 99LT 284
Felthouse v Bindley (1862) EWHC CP J 35
Journals
Parker, David, and Gerald Box. Business Law for Business Students 2008. Lawbook Company,
2008.
Willmott, Lindy, et al. "Contract law." (2013)
Parker, David and Box, Gerald, (author.) Business law for business students (Third edition).
Pyrmont, N.S.W. Lawbook Co, 2013
Bayern, Shawn. "Offer and Acceptance in Modern Contract Law: A Needles Concept." Cal. L.
Rev. 103 (2015): 67.

15ESSENTIALS OF CONTRACT
Bartling, Björn, and Klaus M. Schmidt. "Reference points, social norms, and fairness in contract
renegotiations." Journal of the European Economic Association 13.1 (2015): 98-129.
McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK),
2014.
Wilkinson-Ryan, Tess, and David A. Hoffman. "The common sense of contract formation." Stan.
L. Rev. 67 (2015): 1269.
Hoffman, David A., and Zev J. Eigen. "Contract Consideration and Behavior." Geo. Wash. L.
Rev. 85 (2017): 351.
Perry, Christina. "Good Faith in English and US Contract Law: Divergent Theories, Practical
Similarities." Bus. L. Int'l 17 (2016): 27.
Shavell, Steven. "Damage measures for breach of contract." The Bell Journal of
Economics (1980): 466-490.