Having a written contract is a great start for doing business, but does yours do everything you need it to? Under English Law, the terms of a contract needn’t be in written form and, where a contract is silent about specific issues, you could be exposed to the risks of terms being implied by law or custom and practice.
Sometimes it can be beneficial to rely on implied terms, particularly if they suit your contracting position and you want to keep your terms brief and avoid extensive negotiations. If, however, you are not aware of the terms that can/will be implied, you could be exposing your business to a greater risk than you realise.
So how do implied terms work? Basically, as the name suggests, if a contract is silent on certain areas, terms can be implied from the law or common practice in order to fill gaps or add sense to a contract. This can be as simple as dealing with interest on late payments to more complex arrangements regarding the apportionment of liability.
Generally, an issue with implied terms will not come to light until something has gone wrong with a contract, by which time it can be too late. To be proactive, you should analyse your terms to check that they say what you want them to and don’t expose you to a greater risk than is strictly necessary.
This note does not constitute legal advice and is for general information only to highlight common issues.