Contract Terms Implied By Prior Conduct

Where parties to a contract have a history of dealing on particular terms, should those terms not be included in a later contract then they may be implied should the parties be dealing on similar terms.

A Court will imply such terms even if they have not been expressly included in the agreement.

The leading case on this area is Hillas v Arcos (1932) 147 LT 503. This case related to the sale of timber. The original contract was made in 1931 it’s terms were rather vague i.e. no details as to type of timber, shipment etc however it did include an option clause allowing the claimant to buy a further 100,000 lengths of timber in 1932. In 1932 the claimant attempted to rely upon this clause but the defendant refused on the basis that the agreement was too vague. In Court the Judge determined that as the option clause was within the original terms and they were successfully completed then the option should be carried out under the same terms i.e. the actions of the defendant in supplying certain timber etc should be implied.

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