Contract Terms Implied By Custom

Parties to a contract may be bound by implied trade customs when it is deemed that this is their intention, despite the fact that there may be no express terms on this matter.

An example of such trade customs may be for one party to pay insurance premiums, methods of delivery etc.

Of course commercial law as a whole has originated from custom so this is no surprise, for a long time this was described as ‘Mercantile Law’. One important requirement for a custom to be implied is that there are no express terms to the contrary. The leading case on this point is Les Affreteurs Reunis SA v Walford (Walford’s Case) [1919] AC 801. In this case Walford claimed commission at a rate of 3% having negotiated a ship charter this had been agreed and was mentioned in the contract. However custom in the industry was that commission was only payable when a ship had actually been hired, this would conflict with the terms of the contract and thus was not implied.

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