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Implied Contract Terms - Dispute

An area which comes up time and time again in court is implied terms in contracts. To explain a little further, if a supplier asks you to sign a contract for services or goods and then there is a dispute over those services or goods, the obvious place to check initially is the contract.

When you do, it is unlikely there will be much said in there about what your rights are if the services or goods are not satisfactory. This is where implied terms come into play and can be relied upon.

Think of an implied term as something that exists and indeed applies to contracts but is not actually written into the contract. Such an implied term would be the use of reasonable care and skill under the Supply of Goods and Services Act.

Legislation provides rights to consumers, which the consumer can then reply upon, even though there is no specific mention of the legislation in the signed contract.

In a recent case I dealt with in Court, my client had entered into a contract with a company that provides marketing services. My client was not happy with the quality of the leads being supplied, nor was he happy with the level of service being provided by the marketing company. It was a 12 month contract but my client terminated in writing after 2 months because he did not want to pay for the remainder of the contract as it was simply going to be a waste of money (he had previously tried to resolve with the marketing company but they could not care less).

The marketing company issued proceedings against my client for breach of contract (early termination), seeking to recover from my client the remainder of the contract value*. Despite it clearly being pointed out to the marketing company that my client would defend any claim using the implied term of reasonable care and skill, the marketing company went into the litigation without a second thought.

As a result, my client was successful at court and the Judge found that my client was entitled to terminate the contract because the leads supplied by the marketing company were of a diabolical standard and because the service (such as returning emails over a month after my client contacted them) was found not to be reasonable.

It is a common misconception that only what is on the contract counts. Whilst to a certain extent that is true, it does not take into account implied terms. Therefore, if you find yourself in a position where you are dissatisfied with a supplier and the service they are providing to you, ensure you seek legal advice as to whether or not you have grounds to terminate the contract.

* As a side point, I will blog about this aspect of the claim. The Judge found that even if the marketing company were successful in their breach of contract claim, they could not recover the full contract price, only the profit element of the contract which ‘probably’ amounts to little more than 10% of the contract price.

Richard Howlett is a solicitor at Selachii LLP - 02077925649 - richard@selachii.co.uk

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