Implied & Unfair, exclusion clauses and terms
Sec. 4 ch. 6 poole: Implied Terms:
Liverpool City Council v Irwin, 1977
Local authority owned tower block in which tenants lived
Tenancy agreement imposed obligations on tenants but none on landlord
Tenants refused to pay rent to landlord since apartment block was in bad conditions,
arguing that he was in breach of contract as this was his contractual duty
Was this term implied in the agreement?
Held: there was a duty to take reasonable care (implied term) however the court
found the landlord satisfied this
Lord Wilberforce: bilateral contract, court follows Moorcock authority to test if
agreement could stand without implied term
Found this test not applicable here; as contract would work without this term of
taking reasonable care
Found there must be an implied term that; tenants can use the stairs easily, as well
as lifts and rubbish bins
All these could be used in this case; hence landlord took reasonable care in court’s
view
I) Terms implied in law:
Has the law already defined the contractual obligation?
Liverpool case example of this: existing law between landlord and tenant
Another case: Scally v Southern Health & Social services board, 1992
Found term must be reasonable and necessarily important to be implied in contract
Mahmud v Bank of Credit& Commerce International SA, 1998:
The banks banking business collapsed and an authority discovered that it carried out
fraudulent business over years
Former employees of the bank were unable to find jobs and blamed the bank’s
reputation, sued
Held: employer impliedly under obligation to his employees to not lead corrupt
business, foreseeable that this breach would badly reflect on employees future
Lord Steyn: the implied term of mutual trust & confidence
Employees rely on this implied term in law, party of all employment contracts
Crossley v Faithful& Gould Holdings, 2004
CA: also focus on reasonableness and fairness rather than just necessity
Implied term for the economic well-being of the employee (def. firm advised him to
retire early)
Unfair- too much burden on employers?
Dyson LJ: reasonable to have an implied term such as this
Term is necessary: term is a legal incident (implied by law) between employer and
employee relationship
Sec. 4 ch. 6 poole: Implied Terms:
Liverpool City Council v Irwin, 1977
Local authority owned tower block in which tenants lived
Tenancy agreement imposed obligations on tenants but none on landlord
Tenants refused to pay rent to landlord since apartment block was in bad conditions,
arguing that he was in breach of contract as this was his contractual duty
Was this term implied in the agreement?
Held: there was a duty to take reasonable care (implied term) however the court
found the landlord satisfied this
Lord Wilberforce: bilateral contract, court follows Moorcock authority to test if
agreement could stand without implied term
Found this test not applicable here; as contract would work without this term of
taking reasonable care
Found there must be an implied term that; tenants can use the stairs easily, as well
as lifts and rubbish bins
All these could be used in this case; hence landlord took reasonable care in court’s
view
I) Terms implied in law:
Has the law already defined the contractual obligation?
Liverpool case example of this: existing law between landlord and tenant
Another case: Scally v Southern Health & Social services board, 1992
Found term must be reasonable and necessarily important to be implied in contract
Mahmud v Bank of Credit& Commerce International SA, 1998:
The banks banking business collapsed and an authority discovered that it carried out
fraudulent business over years
Former employees of the bank were unable to find jobs and blamed the bank’s
reputation, sued
Held: employer impliedly under obligation to his employees to not lead corrupt
business, foreseeable that this breach would badly reflect on employees future
Lord Steyn: the implied term of mutual trust & confidence
Employees rely on this implied term in law, party of all employment contracts
Crossley v Faithful& Gould Holdings, 2004
CA: also focus on reasonableness and fairness rather than just necessity
Implied term for the economic well-being of the employee (def. firm advised him to
retire early)
Unfair- too much burden on employers?
Dyson LJ: reasonable to have an implied term such as this
Term is necessary: term is a legal incident (implied by law) between employer and
employee relationship
