What’s growing beneath the surface? Implied terms lurking in your commercial contracts

What are implied terms?

Even the most carefully drafted agreements contain more than meets the eye. While parties often focus on the express terms they have negotiated, every contract also carries a layer of unseen obligations: implied terms. These arise through law, custom, intention or statute and can shape the rights and liabilities of the parties just as much as the words on the page.

As they’re not expressly stated, implied terms often go unnoticed until something goes wrong – at that stage, they can have significant consequences. Understanding when such terms arise, and how far they can fill gaps or impose duties, is essential to avoiding surprises and minimising the risk of disputes.

This article explores the key implied terms relevant to commercial contracts, why they matter and how recent case law – including Barton and others v Morris and another [2023] – illustrates the risks of assuming the written contract tells the whole story.

Key statutory implied terms

A number of statutes can imply terms into contracts. For business‑to‑business arrangements, the most relevant are:

Sale of Goods Act 1979, with the key statutory protections including:

• Section 13 – Goods will correspond with their description
• Section 14(2) – Goods are of satisfactory quality
• Section 14(3) – When bought for any particular purpose, goods will be reasonably fit for that purpose where the buyer expressly or implicitly made this known to the seller.

Supply of Goods and Services Act 1982, with the key statutory protections including:

• Section 13 – Services must be carried out with reasonable care and skill
• Section 14 – If no time is agreed, services must be provided within a reasonable timeframe.

These terms apply even where the contract is silent.

Why implied terms matter

Contracts rarely anticipate every scenario. Where gaps arise, courts may imply terms to make an agreement workable. However, courts approach this cautiously. A term will only be implied where it’s necessary to give business efficacy to the contract, or so obvious that it goes without saying. Courts will not imply terms simply because doing so would seem fair or commercially sensible.

Identifying foreseeable risks and addressing them expressly during negotiations is therefore essential. Relying on the court to step in later can leave parties exposed, particularly where silence leaves ambiguity.

In practice: Barton and others v Morris and another [2023]

In this case, Mr Barton was promised £1.2m if a property he introduced sold for £6.5m. The property ultimately sold for £6m and the agreement was silent on what would happen if the threshold was not met.

Mr Barton argued for an implied term entitling him to reasonable remuneration or an unjust enrichment claim.

The Supreme Court rejected both claims. It held that implied terms can’t contradict the express structure of a deal, and courts will not rewrite a bargain simply because one party ends up with an unfavourable outcome. Silence alone doesn’t create an obligation to pay.

The case highlights the risks that arise where contracts contain gaps: courts may not intervene if a foreseeable scenario was left unaddressed, and terms will only be implied when necessary – not just to achieve commercial fairness.

Conclusion

Implied terms are the hidden roots that can stabilise or undermine a contract. They may support an agreement where essential, but they will not rescue parties from silence, poor drafting or unforeseen scenarios.

To prevent issues from growing beneath the surface, businesses should:

• Clearly document intentions
• Address foreseeable alternatives
• Avoid relying on the courts to fill contractual gaps.

A well‑drafted contract leaves nothing lurking beneath the surface.