American Contract Law for a Global Age, 2017a

Unit 20
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TERMS AND INTERPRETATION
Part Four
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Implied Terms
FOCUS OF THIS UNIT
By now you should understand the concept that what most non-lawyers think
of as “the contract”—the written document—is only part of the larger “agreement”
between the parties. Furthermore, this agreement is only part of that total web of
obligations that lawyers call “the contract.” As you saw in the discussion of the parol
evidence rule, oral terms agreed to by the parties may be part of the deal alongside
the written contract document. But can terms become part of a contract if the parties
have never addressed them at all? The answer, perhaps surprisingly, is yes. Two
broad categories of “implied” terms exist that courts will insert into contracts even
when the parties have not expressly agreed to them.
Terms Implied from the Parties’ Deal. It is axiomatic in modern contracts law
that all contracts are, in some fashion, “incomplete.” That is, it would be extremely
time-consuming and probably impossible to address, in advance, every possible issue
that might someday come up under the contract. Certain things that the parties did
not bother to discuss would almost certainly have been included in their contract if
they had been asked about it. If, to take a simple example, a buyer in Manhattan
purchases something from a seller in Brooklyn for “$5,000,” the “$” almost certainly
is intended to refer to United States dollars, and not those of, say, Canada or
Singapore. Although the parties never specified United States dollars, courts and
other readers of the contract infer from the circumstances that this is what they
meant. A contract for a restaurant meal likewise almost certainly implies a promise
by the restaurant that its food is not poisonous; a contract for a new computer implies
a promise that the item will actually work when it is delivered. Here is a classic
formulation of implied terms by one British judge:
Prima facie that which in any contract is left to be implied and need not
be expressed is something so obvious that it goes without saying; so that,
if, while the parties were making their bargain, an officious bystander
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UNIT 20: IMPLIED TERMS 399