The House found it to be an implied term of a tenancy agreement that the lessor was to be responsible for repairing and lighting the common parts of the building of which the premises formed part. In analysing the different types of contract case in which a term might be implied the House preferred to describe the different categories identified as no more than shades on continuous spectrum. A court could not in law to imply a term into a contract simply because it thought it reasonable to do so, however one of the established situations for implication of terms is that it is necessary for business efficacy.
The Court of Appeal had declined to imply into letting agreements for a building in multiple occupation, an obligation on a landlord to repair essential means of access to the building.
Held: The House rejected the suggestion of Lord Denning MR that the courts have power to introduce terms into contracts merely because they think them reasonable. Lord Cross distinguished between the importation of implied terms into a contract applicable to all cases of a defined type and cases where what the court was being in effect asked to do was to rectify a particular contract by inserting in it a term which the parties have not expressed. In the latter kind of case: ‘Here it is not enough for the court to say that the suggested term is a reasonable one the presence of which would make the contract a better or fairer one; it must be able to say that the insertion of the term is necessary to give – as it is put – ‘business efficacy’ to the contract and that if its absence had been pointed out at the time both parties – assuming them to have been reasonable men – would have agreed without hesitation to its insertion.’ The tenant’s appeal succeeded on other grounds.
Lord Cross of Chelsea: ‘When it implies a term in a contract the court is sometimes laying down a general rule that in all contracts of a certain type – sale of goods, master and servant, landlord and tenant and so on – some provision is to be implied unless the parties have expressly excluded it. In deciding whether or not to lay down such a prima facie rule the court will naturally ask itself whether in the general run of such cases the term in question would be one which it would be reasonable to insert. sometimes, however, there is no question of laying down any prima facie rule applicable to all cases of a defined type but what the court is being in effect asked to do is to rectify a particular – often a very detailed – contract by inserting in it a term which the parties have not expressed. Here it is not enough for the court to say that the suggested term is a reasonable one the presence of which would make the contract a better or fairer one; it must be able to say that the insertion of the term is necessary to give – as it is put – ‘business efficacy’ to the contract and that if its absence had been pointed out at the time both parties – assuming them to have been reasonable men – would have agreed without hesitation to its insertion.’
Lord Cross of Chelsea, Lord Wilberforce
[1976] UKHL 1, [1977] AC 239, [1976] 2 All ER 39
Bailii
England and Wales
Citing:
At CA – Liverpool City Council v Irwin CA 1976
The court considered the nature and extent of the obligations of landlords of a building in multiple occupation to repair essential means of access.
Held: Lord Denning MR (dissenting) suggested that the court had power to imply a term if it . .
Cited by:
Cited – Baker v Black Sea and Baltic General Insurance Co Ltd HL 20-May-1998
The question agreed to be before the court was ‘Where an insurer incurs costs in investigating settling or defending claims by his insured, can the insurer recover a proportion of these costs under a quota share or other form of proportional . .
Cited – Hughes and Another v Greenwich London Borough Council HL 26-Oct-1993
A headmaster’s occupation of a house in the school was not ‘for the better performance of his duties’, and so was not a tied house, and so he had the right to buy it. A term could not be implied into his contract to require him to occupy the house. . .
Cited – Robin Ray v Classic FM Plc PatC 18-Mar-1998
Contractor and Client Copyrights
The plaintiff had contributed a design for a system of classifying and selecting tracks to be played on a radio station. He did so under a consultancy contract.
Held: A Joint authorship claim required that the contributor had made some direct . .
Cited – Tai Hing Ltd v Liu Chong Hing Bank PC 1985
(Hong Kong) The relationship between banker and customer is principally a contractual one between debtor and creditor. As between the banker and his customer, the risk of loss through forgery of the customer’s signature falls on the banker unless . .
Cited – Donington Park Leisure Ltd v Wheatcroft and Son Ltd ChD 7-Apr-2006
Leave to apply was pursued under the provisions of a Tomlin order. The parties had disputed the extent to which parts of the order should be exhibited to the court.
Held: The Tomlin order should be amended to add terms necessary to give effect . .
Cited – Legal and General Assurance Society Ltd v Expeditors International (Uk) Ltd CA 24-Jan-2007
Leases contained break clauses which the tenant purported to exercise. The landlord replied that they were ineffective because the tenant had not complied with his repair covenants. The dispute appeared settled after negotiations, and the settlement . .
Cited – J and H Ritchie Ltd v Lloyd Ltd HL 7-Mar-2007
The appellants had bought a seed drill from the respondents. It had been repossessed but sold as near new. A fault was noticed after two days use, and it was returned. The defendants repaired it without agreeing this with the appellant, and then . .
Cited – Hussain v Mehlman CC 5-Mar-1992
(County Court) The defendant landlord granted the plaintiff a three year assured shorthold tenancy. He now appealed a finding that he was in breach of an implied covenant to maintain the space heating, and otherwise. The tenant had returned the . .
Cited – Westminster (Duke of) and others v Guild CA 30-Mar-1983
The landlord brought an action for non-payment of rent. The tenant sought to set off a failure by the landlord to repair the building of which his flat was part and which failure had caused him loss. The landlord said that it had no express duty to . .
Cited – Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council CA 25-May-1990
The club had enjoyed a concession from the council to operate pleasure flights from the airport operated by the council. They were invited to bid for a new concession subject to strict tender rules. They submitted the highest bid on time, but the . .
Cited – Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) HL 9-Jul-2008
The parties contracted to charter the Achileas. The charterer gave notice to terminate the hire, and the owner found a new charterer. Until the termination the charterers sub-chartered. That charter was not completed, delaying the ship for the . .
Cited – R Griggs Group Ltd, R Griggs and Co Ltd, Airwair Ltd v Evans, Raben Footwear Pty Ltd, Lewy, Lewy CA 25-Jan-2005
The claimants distributed Doc Marten footwear. They asked an agency to prepare a logo. The agency paid an independent contractor to prepare it, but did not take an assignment of copyright to it. The contractor sold the rights in the logo to the . .
Cited – Marks and Spencer Plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd and Another CA 14-May-2014
The court considered the operation of a break clause within a lease, and in particular ‘ Can the court imply a term which enables the lessee to get back that part of the advance payment of rent which relates to a period (‘the broken period’) after . .
Cited – Mr H TV Ltd v ITV2 Ltd ComC 8-Oct-2015
The claimant had contracted with the defendant for the production of a series of reality TV shows featuring celebrities. After severe personal clashes between the people involved on the claimants side, the contract was terminated. The claim was that . .
Cited – Marks and Spencer Plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd and Another SC 2-Dec-2015
The Court considered whether, on exercising a break clause in a lease, the tenant was entitled to recover rent paid in advance.
Held: The appeal failed. The Court of Appeal had imposed what was established law. The test for whether a clause . .
Cited – Edwards v Kumarasamy SC 13-Jul-2016
The claimant sub-tenant had been injured entering the block of apartments. He said that the freeholder was responsible despite no report of the disrepair having been made. The lease excused the landlord from unnotified liability. The parties . .
Cited – Gard Marine and Energy Ltd and Another v China National Chartering Company Ltd and Another SC 10-May-2017
The dispute followed the grounding of a tanker the Ocean Victory. The ship was working outside of a safe port requirement in the charterparty agreement. The contract required the purchase of insurance against maritime war and protection and . .
Cited – Lehman Brothers International (Europe) v Exotix Partners Llp ChD 9-Sep-2019
The parties had contracted to trade global depository notes issued by the Peruvian government. Each made mistakes as to their true value, thinking them scraps worth a few thousand dollars, whereas their true value was over $8m. On the defendant . .
Lists of cited by and citing cases may be incomplete.
Contract, Landlord and Tenant
Leading Case
Updated: 02 November 2021; Ref: scu.248614
