Lloyd's Maritime and Commercial Law Quarterly
CONSTRUCTION AND IMPLICATION: IN DEFENCE OF BELIZE TELECOM
David McLauchlan*
In Attorney-General of Belize v Belize Telecom Ltd the Privy Council, in a judgment delivered by Lord Hoffmann, held that the task for a court in determining whether a written contract contains an implied in fact term is essentially no different from that involved in interpreting the express terms of the contract. His Lordship said that implication is part of the process of determining the objective meaning of the contract—the meaning that the document would convey to a reasonable person who has knowledge of all the relevant background to the contract. This view has been accepted by the English and New Zealand courts but rejected by the Singapore Court of Appeal. It has also attracted criticism from some academic commentators, particularly in so far as it relegates the well-known “business efficacy” and “officious bystander” tests to the status of mere aids to resolution of objective meaning. This article argues that the criticisms are unconvincing and that Lord Hoffmann's judgment is to be preferred because it has simplified the law of implied terms and put it on a sounder conceptual footing.
In Attorney-General of Belize v Belize Telecom Ltd
1 Lord Hoffmann, delivering the judgment of the Privy Council, made some important observations about the process of implication where the scope or legal effect of a legal instrument, including an offer, written contract or statute, is in issue. These observations have proved to be contentious, particularly in so far as they have been perceived as altering well-established law relating to the tests for determining whether a contract contains an implied in fact term,2 the best known modern exposition of which was to be found in the earlier decision of the Privy
* Professor of Law, Victoria University of Wellington; Professorial Fellow, The University of Melbourne; Honorary Professor, TC Beirne School of Law, The University of Queensland.
The following abbreviations are used in the footnotes:
Chitty: HG Beale (ed.), Chitty on Contracts, 31st edn (Sweet and Maxwell, London, 2012), vol.1;
Peden: Elisabeth Peden, Good Faith in the Performance of Contracts (LexisNexis, Australia, 2003).
1. [2009] UKPC 10; [2009] 1 WLR 1988.
2. Lord Hoffmann does not address the category of “implied in law” terms. Cf J W Carter, “The implication of contractual terms: problems with Belize Telecom” (2013) 27(3) CLQ 3, 3 (arguing that, “if anything”, such terms “are more easily justifi ed on a construction basis than terms implied in fact”). For an argument that the existence of all implied terms, other than those implied by statute, depend on a true construction of the contract and hence application of the Belize approach, see Jane Knowler and Charles Rickett, “Implied Terms in Australian Contract Law: A Reappraisal after University of Western Australia v Gray” (2011) 37 Monash Univ L Rev 145.
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