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(b) That's probably right. It is unlikely the term claimed by B exists by implication. Generally, terms are recognised as implied ad hoc (that is, by implication in the particular circumstances of the case) only if the court decides that it is obvious that this is what the parties intended at the time of contracting.

To decide whether or not it is sufficiently obvious that a suggested term was agreed to without being expressly stated, the 'officious bystander' test is applied. This test involves imagining a bystander asking the parties, when the contract was made, whether the suggested term was also part of their contract. If it can be inferred from the known circumstances that the parties would have answered 'of course', then the suggested term is sufficiently obvious. In addition, the following requirements must be satisfied before the term is implied into the contract ad hoc:

  • The suggested term must be reasonable and fair.
  • It is needed to make the contract workable or 'commercially complete'.
  • The term can be clearly expressed.
  • It is compatible with the expressly agreed terms of the contract.

Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337.

Moorhead v Brennan (t/as Primavera Press) (1991) 20 IPR 161.

It has also been clearly stated by the courts that implied terms must arise from an analysis of the written (or expressly agreed) terms of the contract, and not by reference to any extrinsic (external) evidence. Thus, the court will only examine the agreed terms to decide whether or not any further terms need to be implied ad hoc.

BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266.