If your contract is silent on a matter you cannot rely on the assumption that the contact must imply a clause to plug this issue simply because it appears fair & reasonable to do so.

In order for an implied clause to exist it must:

  1. Be reasonable and equitable;
  2. Be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;
  3. Be so obvious that ‘it goes without saying’;
  4. Be capable of clear expression;
  5. Not contradict any express term of the contract.

The above tests are not carried out retrospectively but at the time the contract was entered into from the viewpoint of a reasonable person in a similar position. When analyzing contracts, you should be reviewing not only what it says but also what it doesn’t say & clarifying any points where the contract is unclear or silent.

We are often asked to review contracts retrospectively in order to determine a meaning or interpretation, this is often too late. Any interpretation must arise from the time the contract was formed not with the benefit of hindsight.

This is another example of why you need to understand & be happy with your contract before you sign. You only get one chance to get it right!