Express Terms v Implied Terms

In the case of Irish Bank Resolution Corporation Ltd v Camden Market Holdings Corp & Ors [2017] EWCA Civ 7 the Court of Appeal reiterated that when determining disputes about an implied term, it is necessary to first interpret the express terms. The Court referenced Lord Neuberger’s comments in Marks & Spencer that the “cardinal rule” where an express term confers an express power on a party, is that is cannot be limited or altered by any implied term.

In this case, Camden Market Group (CMG) brought a claim against Irish Bank Resolution Corporation Ltd (IBRD) for breach of contract, alleging that there was an implied term of the facility agreement that restrained IBRD from doing anything that might hinder Camden Market Group’s marketing of properties.At first instance, the application was refused on the grounds that it was arguable that the implied term existed and that the matter should go to trial. IBRD appealed this decision on the grounds that the implied term would be inconsistent with the express terms of the contract.

The Court of Appeal allowed the appeal and entered summary judgment against Camden Market Holdings. It held that Camden Market Holding’s case was bad in law and that it had no real prospect of succeeding. The judgment confirmed that it is settled law that when determining disputes about an implied term, it is necessary to first interpret the express terms.

A court may imply a term into a contract to fill a gap in the contract’s drafting. The rationale for implying a term in this way is to reflect the parties’ intentions when the contract was entered into. The test however, is an objective one in which the court will consider what a reasonable person would have understood the parties’ intentions to be, given the background knowledge reasonably available to the parties at the time they entered the contract.

This decision highlights that, in considering whether terms can be implied into written contracts, the court will focus on whether the pleaded implied term is substantively inconsistent with any of the express terms. Where an express term confers an express power on a party, such a power cannot be limited or altered by any implied term.

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