Content area
Full Text
(ProQuest: ... denotes non-US-ASCII text omitted.)
This article is about the implication of terms into contracts based upon the presumed intention of the parties. It is particularly concerned with the decision of the Judicial Committee of the Privy Council in Attorney General of Belize v. Belize Telecom Limited,1 a number of recent Court of Appeal decisions thereafter, and whether there has been any change in the law. Before getting to Belize, it is necessary to consider, as briefly as possible, what went before.
BUSINESS EFFICACY AND THE OFFICIOUS BYSTANDER
Prior to the decision in Belize it had long been established that, for a term to be implied into a contract based upon the presumed intention of the parties, it must be necessary to give business efficacy to the contract.
This requirement is derived from the well-known case of The Moorcock 2, a case involving a vessel which was damaged when docking at the defendant's jetty in the River Thames. In holding that the defendant was liable for breach of an implied undertaking to take care to ensure that the river bed was reasonably fit for purpose, Bowen L.J. said that a term was to be implied to give such "business efficacyâ[euro] to the transaction as must have been intended by both parties as businessmen.
The business efficacy test, as thus enunciated, was later supplemented by what has become known as the officious bystander test. The origin of this test is to be found in the judgment of Scrutton L.J. in Reigate v. Union Manufacturing Company 3 (although the learned judge did not use the words "officious bystanderâ[euro]). The same test was restated, and the phrase "officious bystanderâ[euro] coined, by MacKinnon L.J. in Shirlaw v. Southern Foundries (1926) Limited,4 where the learned judge said that for a term to be implied it had to be so obvious as to go without saying, such that if an officious bystander had suggested it to the parties while they were making their contract, they would both unhesitatingly have approved the term.
It is to be noted that the officious bystander is not the arbiter of whether or not a term should be implied. He asks the relevant question; he does not answer it....