Real Estate Tip of the Week: What are you implying?

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Real Estate Tip of the Week: What are you implying?

Published 30 October 2017

Frequently contracts, including leases, may not fully express all the intentions of the contracting parties. However a term can sometimes be implied into a contract in order to reflect the assumed intentions of the parties. The circumstances where a term can be implied on this basis are where:

  1. it is necessary to give business efficacy to the contract; or
  2. it is so obvious as to go without saying;
  3. provided the implied term is capable of clear expression and does not contradict an express term already in the contract.

In assessing whether to imply a term the actual intention of the parties is not critical; the Court will apply an objective test to decide what the intention of reasonable people in the position of the contracting parties would have been.

In the recent case of Sparks v Biden (2017 EWHC 1994 (Ch)) the court implied a term into an option agreement. The agreement required a buyer to apply for planning permission, develop the property and then pay overage on the sale of developed units on the property. The buyer developed but did not sell. There was no express term in the agreement that the buyer was required to sell the developed units (hence triggering the overage payments) and the court decided that such a term should be implied.

It is critical when entering into a contract that all necessary terms are included to ensure certainty for the parties and minimise the risk of having to argue that a term should or should not be implied.


Anne Holden

Anne Holden


+44 (0)117 918 2133

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