Doctrine of Implied Terms

Introduction 

In India, contract law is extensively used in the commercial area by companies for transactions and many more related to work. The important idea for making contract law is that neither of the parties is more powerful or can do anything without a written rule under the guidance of law. But there are ideas that are not readily written in the contract, but they are understood as inherent. For these situations or scenarios, there is a doctrine called the doctrine of implied terms, which basically mentions the rule that the terms that are not written are in the context at the time of making, but the parties understood them as their own.

Sometimes, during the contract, there can be  scenarios which is not predicated  like  when the act or solution is not written in the clauses of the contract. To do away with and to protect the interests of either of the parties, these doctrines of implied terms are very useful for the court. In India, the contract law is ruled  by the Indian Contract Act of 1872, which lays the foundations or basic principles of the contract. The doctrine of implied terms is also useful because, in a contract, everything can not be mentioned by either of the parties. As said earlier a contract is the core part of the company , business or doing trade among the parties .

What is the Doctrine of Implied Terms?

The doctrine of implied means that in conditions when there is  any clause is not written directly in the contract but  it is implied to both parties. The courts find these terms important to solve any problems or concerns that arise between the parties during the duration of the contract. These terms ensure that the contact is followed effectively and efficiently and achieves the goal of the contact. These terms are not directly stated in the Indian Contract Law of 1872. Section 9 of the act mentions the Implied contract. In recent years, it has been seen that courts are sometimes not in a position to use the doctrine of implied terms in every case of a contract dispute.

For an  example, if a person boards a flight or train, they would never sign  a written contract with clauses with the pilot or loco pilot of the flight or train because it is not possible to enter into a contract , but  the pilot will  leave at them their destination and will do their work . This was a result of the implied terms in a contract. In recent the doctrine of implied terms has been inferred in different ways, like through the court or by other laws, legislation, or statutes.

Evolution of Doctrine.

The doctrine of implied terms has evolved through regular development and inference from past cases around the world, and in India also. Previously, the English law started to introduce the concept of the implied terms through the officious bystander test in the case of Shirlaw v. Southern Foundries (1939), where the court asked if any new term introduced related to the contract, can they agree to this. Throughout time, courts held and stated that not all things can be written, like unforeseeable events related to a contract. In Indian law, implied contracts are mostly called or referred to as quasi-contracts.

There are also other legislation or laws in which there are some implied terms, like in the Sale of Goods Act,1930, where the seller has to ensure the goods are of good quality, fresh, etc. Courts do not always apply this approach in every case, but where it seems necessary. And there is a continuous process of evolution of this doctrine through India  and will ensure the correct use of it by the court and the parties in the contract. It  has a history from English law now coming to Indian law .

Features of the doctrine 

The doctrine of implied terms had the following features:-

1. This doctrine helps both parties to avoid any type of internal conflicts and fights.
2. Implied terms have a limited area of role in the contract.
3. It helps in the effective working of the contract and also helps the court to infer the meaning if any problem arises.
4. This doctrine also helps to ensure that both parties are at an equal level, or called fairness.
5. This overview of doctrine can also help to make some legislation or law for any industry or field further.

Landmark Judgement

1. LIC of India v. Consumer Education & Research Centre (1995)

-In this case, Life Insurance Corporation (LIC) had made some policies for the insurance in which some diseases were excluded from he coverage of claims. The victims reached the Supreme Court of India, stating that it was clearly a violation of their rights. The court held that if a contract were something harsh on the weaker people of the society, then it can be wrong and cannot do away with the main goal of insurance is to protect people from unforeseeable situations in life. The court then directed the LIC to cover their claim and applied the doctrine of implied term.

2. Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly (1986)

-The case deals with the terms and conditions of the employees at the workplace. The employees of the Central Inland Water Transport Corporation Limited were protesting against the rule that will give power to the employer to lay off the employees at his /her own will and wish. The employees stated that this was an unequal and arbitrary power of the employers. The court then struck down the rule regarding service by citing the doctrine of implied terms. Through these cases, the doctrine of implied terms becomes clear, concise, and useful to the people.

Limitations of the doctrine 

1. First and foremost, the proving of the doctrine of implied  terms in the contact can be very difficult because it is not stated, it is implied by both of the parties.
2. If any one of the parties is more powerful than the other, then it can not be ensured that the parties will follow the implied terms, which will increase the chances of internal conflicts.
3. Sometimes this doctrine can create  uncertainty and confusion among the parties on the points of implied terms, and both can not agree on the same.
4. The doctrine of implied terms most depends upon the court, where they can apply these and cannot be unreasonable 
5. Overuse of the doctrine of implied terms can also violate the right of fairness of one of the parties.

Related Sections and Articles

 The Doctrine of Implied Terms  has the following related sections and articles:-

1. Indian Contract Law,1872 

• Section 9: Under this section, it is mentioned that contact can or may be implied.
• Section 16:- This section provides provision against the contract that are influenced by pressure or without consent and also provides safeguard to the parties .

2. Sales of the Goods Act,1930:-  Under section 16 of this act, it is stated that there a implied conditions on the buying and selling of the goods .The seller must see  that the product or service delivered is fit in a quality and condition.

Conclusion 

The doctrine of implied terms can be considered a crucial rule in contract law and many other legislations and laws, like the Sale of Goods Act, 1930 . The core part of the doctrine is that if anything is not mentioned in the written contract, then some clause can be inferred by either of the parties or by mutual understanding that can be beneficial for both of them, because everything can not be mentioned in the contract, or in unforeseeable situations. This doctrine can ensure some form of fairness and efficiency in the working of a contract. In this doctrine, there is no use of a written contract  this is inferred by the parties themselves for achieving their objective or goal. This is mostly used in the corporate or business field or in transactions of a company and also used in many filed like property sale , rent and many more .

In India, this doctrine is supported by the Indian Contract, 1872. The provisions in this law state that none of the parties should have unequal power in the contract. Precedents landmark judgments have also helped the doctrine of implied terms to gain a place in the use of contract law. But there are some challenges and limitations of the doctrine of implied terms, like sometimes it cannot express the intention of one of the parties in the contract. As earlier stated over overuse of this doctrine can result in unequal treatment and violation of the rights of people.

At the end, the doctrine of implied terms acts a tool that can be used to ensure fairness and connect and decrease the gap among the parties. This doctrine also serves its application to minimize the gap among the parties. This also helps to promote trust and faith among the parties and also seeks the common intention of them because everything during the contract can not be mentioned in writing.

References

1.https://lawfoyer.in/doctrine-of-implied-terms-incorporation-in-contracts/

2.https://legalvidhiya.com/the-doctrine-of-implied-contracts/

3.https://blog.ipleaders.in/implied-contracts-in-india/#Assessing_the_existence_of_contractual_elements_in_implied_contracts

4. https://indiankanoon.org/doc/1513693/

5.https://indiankanoon.org/doc/477313/

Written by Aryan Raj  an Intern under Legal Vidhiya.

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