pattern of continued judicial explanation of the established fact patterns in terms of vitiated consent or distorted will together with application of statutory regimes focusing on certain undesirable types of behaviour regardless of (or subordinate to) the actual effect of such behaviour. Earlier concerns about whether promises reflect the true will of the contracting parties now mix with legislative paternalism directed against bad faith and unconscionable conduct.

In the DCFR, the old tradition of seeing extortion as relating to the impaired will or consent of the party affected is continued. This comes out most clearly in one of the provisions relating to unjustified enrichment, which provides that ‘coercion’ and ‘threats’ directed against the disadvantaged party are two of the factors giving rise to a lack of free consent by that party.308 No definition is, however, given of either ­factor, so that it is unclear from the text of the DCFR why the idea of coercion is not itself conceived of as wide enough to include threats within it, though the textual implication must be that it is possible to coerce without ­threatening.309 The distinction between coercion and threats is ­maintained in the contractual provisions of the DCFR, where it is provided that the use of ­coercion or the threat of an imminent and serious harm which it is wrongful to inflict, or wrongful to use, renders a contract voidable.310 There is no restriction of the harm threatened to cases of physical harm so that economic harm might equally be relevant. The threat is not relevant if the threatened party had a reasonable alternative.311 The overall tenor of the DCFR approach is summed up in the Principles as being a mixture of concern for lack of true consent as well as the prevention of gains made through undesirable conduct.312 That being so, it is clear that this particular model law shows the same mixed pattern of concerns as do the national systems studied.

10.  Implied terms

It is sometimes said that the implication by courts of terms into contracts, whether with or without legislative authority, represents a fundamental

308DCFR Art. VII.-2:103.

309Indeed, that this is the conception is made clear by the official Commentary to the DCFR, which states that ‘[n]ormally coercion will involve the use of threats, but this is not necessarily so’ (DCFR, Full Edition, commentary, p. 500).

310DCFR Art. II.-7:206(1).

311DCFR Art II.-7:206(2). See the earlier remark on English judicial comments concerning this matter at n. 288.

312DCFR Princ. 42.

unless excluded by the parties (if such exclusion is permitted at law). Thus, while Aristotelian teleology may have fallen out of legal discourse, the idea that there are types or class of contract under which certain obligations will, by default, apply between the parties, has survived the extinction of the Aristotelian worldview.

It has, however, become less common to attempt to connect every implication of a term – whether in a class of contract, or an individual contract – to the supposed or tacit will of the parties. It has become more common in some jurisdictions to assert that, at least where an implication is made in a class of contracts, such implication follows from a policybased rule, regardless (or even in spite of) the will of the parties. Thus, for instance, the implication of a particular standard of quality of goods in contracts for the sale or hire of goods is often made in the face of a desire by the seller or hirer not to guarantee any particular quality. Nonetheless, the policy underlying the implication (usually now an implication stemming from legislation) is said to justify the relevant implication, without the need to refer to the will or the promises of the parties.

Such a situation need not, however, create problems for a promissory view of contractual obligations. As explained earlier in this work, while the origins of contract are quite properly located in the freely exchanged promises of the parties, there is no necessity to see the entire content of the contract as based on specific promises of the parties. Some promises may be invalid or unenforceable because they contravene rules of law, and so will be struck out; other undertakings may be added in, because a targeted legal policy dictates that they are held to be implicit in the class of contract,315 or because, with the policy interest of encouraging and supporting commerce in mind, it is thought necessary for a court to imply the term into a specific contract in order to address a matter to which the parties did not turn their minds.

It is not realistic to see all such contractual omissions and additions as somehow based on the will of the parties: arguments to that effect, whether medieval, nineteenth-century, or contemporary, are unconvincing. It must simply be accepted that the whole content of a contract is not, in every case, referable to the objectively ascertained will of the parties, a reality recognised in the provisions of the DCFR.316 This admission need

315Or as virtue theorists might argue, because implication of a term into a class of contracts gives effect to Aristotelian virtues, such as justice or good faith: see Gordley, Foundations of Private Law, pp. 376–9.

316See DCFR Art. II.-9:101(1), which provides that the terms of a contract may be derived from the express or tacit agreement of the parties, rules of law, practices established between the parties, or usages.

not, however, be seen as abandoning the idea that the very existence of the contract, as well as any term which does result from express agreement of the parties, derives from a promissory undertaking. It merely recognises that the ability to promise, and thereby to assume contractual obligations, is a power which operates within bounds determined by the legal system. Voluntary contractual capacity is a derivative, not an absolute, power: the individual contracting party is free to bind himself only to the extent permitted by the law. Contract is, and remains, promissory in nature, but what can or cannot be promised is subject to limitations imposed by the sovereign lawmaker. There is no need to concede, as some promissory theorists have done, that certain types of implication of terms cannot be made to fit with a promissory theory of contract.317 While it is true that a duty which is implied cannot in every case be referred to the promise, express or implicit, of the party upon whom it is imposed, promissory theory need not attempt to argue that every contract term must be so referable: when the proper source of promissory capacity is recognised as a derivative power granted to parties, one which it is legitimate to constrain in certain ways, then it is rightly recognised that only the existence of the contract at all, and such duties as are legitimately assumed by the parties, needs to be referable to the promises of the parties. Some duties which take effect contractually arise by virtue of imposition, and not agreement.

Before, however, dismissing the idea that any implied terms can be referred to the will of the parties, it may be sensible to take account of the variety of reasons for, and circumstances in which, terms are implied into contracts. When considering the whole field of implied terms, it may be possible to argue that at least some implied terms can be referred to the unexpressed will of the parties. Indeed, it is typical of many legal systems to attempt to describe at least terms implied into specific contracts, rather than a class of contracts, as referable to the unexpressed will of the parties. Thus, a South African court could describe a term implied into an individual contract as

an unexpressed provision of the contract which derives from the common intention of the parties, as inferred by the Court from the express terms of the contract and the surrounding circumstances. In supplying such an implied term the Court, in truth, declares the whole contract entered into by the parties.318

317A concession made by Smith (see Contract Theory, p. 68).

318Alfred McAlpine & Son (Pty) Ltd v. Transvaal Provincial Administration 1974 (3) SA 506 (A), per Corbett AJA at 531–2.

Indeed, so strong are these sentiments in South African law, that terms implied into specific contracts are usually referred to as ‘tacit terms’ rather than implied terms. The attraction of such an attitude for courts is that it maintains the theory that judges are not making contracts for parties, but are merely drawing out what was implicit, but unexpressed, in the parties’ express agreement.

The same theory has found a place in English law, and underlies both the ‘business efficacy’ and ‘officious bystander’ tests developed by the English courts. The former test, developed in The Moorcock,319 and said to rest on ‘what must obviously have been the intention of the parties’, justifies the implication of a term in a contract in order to give ‘the transaction such efficacy as both parties must have intended that at all events it should have’, but which it lacks without the argued for implication.320 It is thus said to be a test of necessity, in the sense that the implication is necessary to support the admitted intention of the parties to enter into a contract. Taking a slightly different approach to drawing out the presumed intention of the parties, the ‘officious bystander’ test, developed in those terms in Shirlaw v. Southern Foundries (1926) Ltd, states the approach to be taken as follows:

Prima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying; so that, if while the parties were making their bargain, an officious bystander were to suggest some express provision for it in the agreement, they would suppress him with a common, ‘oh, of course.’321

Both formulations of when a term should be implied into a specific contract­ evidently rest upon a judicial supposition and presumption as to what the parties’ intentions were. Yet might it not equally, and perhaps more realistically, be suggested that in such instances the parties simply had no intention concerning the specific matter in question, having forgotten to consider it or having deliberately decided not to agree on it out of a realisation that agreement would be unlikely and in the hope that the matter would not fall into dispute? If that is, in some cases, a more realistic assessment of the facts, then judicial assumptions as to tacit intentions of the parties will be no more than fictions, designed to achieve a commercially sensible end but one which in reality is not referable to either

319(1889) 14 PD 64.

320See the judgment of Bowen LJ, at 68. See also the judgment of Scrutton LJ in Reigate v.

Union Manufacturing Co. (Ramsbottom) [1918] 1 KB 592, 605.

321[1939] 2 KB 206, 207, per Mackinnon LJ.

the objective or subjective intention of the parties. The judicial practice of not implying terms unless they are reasonable and equitable322 would seems to reinforce this conclusion: if the real intentions of the parties were at issue, then on occasion it might well be that an inequitable term would have to be included, given that many parties do not always act in good faith.

While some cases of implication may reasonably be said, on the facts, to be referable to an unexpressed intention of the parties (perhaps because circumstantial evidence would, if it were admissible, confirm that the parties had assumed, but simply omitted to express, a matter), it does seem that to conceive of all implications in fact as referable to the unexpressed but nonetheless present intention of the parties is a fiction, adopted to suit the ends of justice and commerce. Equally unconvincing is the recent radical reformulation of the judicial task when implying terms suggested by Lord Hoffmann in the Privy Council Appeal Attorney General of Belize v. Belize Telecom Ltd.323 In essence, Lord Hoffmann suggested that the implication of terms into a written contract is essentially a process of interpreting the contract as a reasonable person would. Reviewing the existing tests of implication of terms in fact, Lord Hoffmann characterised these not as a series of independent tests but ‘a collection of different ways in which judges have tried to express the central idea that the proposed implied term must spell out what the contract actually means’.324 This seems, with respect to his Lordship, to miss the point that very often the express terms before a court will quite simply not give any clues to whether or not a suggested implication should be made. If the parties have simply forgotten to address a matter, then the express terms may be resolutely silent on the question of what the contract ‘means’ in relation to the omitted matter. In such cases, to suggest that an interpretative approach will solve the matter of whether or not a specific implication should be made seems overly optimistic. True, drawing out the assumed intention of the parties through interpreting the express terms may well work in some cases,325 but not all. The suggested approach of Lord Hoffmann does not seem to offer a comprehensive solution to the problem of implication.

322As Lord Simon said in BP Refinery (Westernport) Pty Ltd v. Shire of Hastings (1977) 180 CLR 266, 283, 1978 ALJR 20, 26, ‘for a term to be implied … it must be reasonable and equitable’.

323 [2009] UKPC 10. 324 See judgment of Lord Hoffmann, para. 27.

325As, for instance, it did in the recent decision of the Court of Appeal in Mediterranean Salvage & Towage Ltd v. Seamar Trading & Commerce Inc. [2009] EWCA Civ 531, [2010] 1 All ER (Comm) 1.

It seems realistic to accept that one cannot explain all terms implied into individual contracts as resting either upon the tacit, unexpressed intentions of the parties or on a reasonable interpretation of the express terms of the contract. Some instances of implication seem to constitute judicially crafted reasonable solutions designed to uphold the intention of the parties to enter into a contractual relationship. When one moves into the field of terms implied into classes of contract, then it seems reasonably clear that such implications are made for policy reasons, for instance to create an equitable balance of duties between landlord and tenant under a lease,326 rather than because the implication gives expression to the parties’ presumed intentions. This is most evidently the case where the implication is required to be made as a result of legislative provision, but even judicial implications of terms into classes of contract at common law can only with great artificiality be explained as deriving from the parties’ will. Even to call such terms (as some jurisdictions do) ‘natural terms’, deriving from the type of contract concerned and thus its presumed purpose, does not greatly assist in the argument that it is the will of the parties which gives rise to the natural implication, unless one argues that to will the specific end of the type of contract in question (for instance, hire) is by implication to will the natural terms which are said to apply to such a type of contract. But that rather overemphasises the idea of the human will, when what is crucial in the idea of ‘natural terms’ is the purpose and nature of the contract, and thus what pertains to that nature.

When one arrives at terms which the courts have suggested ought to be implied into every contract, then one is arguably dealing with a default rule of contract law, rather than an implied term, though both conceptions seem maintainable depending upon the jurisdiction in question. Thus, while a mutual duty upon contracting parties to cooperate to ensure that the contract’s ends are achieved can be expressed as a term to be implied into all contracts,327 such a duty of mutual cooperation might alternatively be described as a default rule of contract law, perhaps one inspired by the fundamental principle of good faith.328 The same debate might be had in relation, for instance, to a duty to exercise discretionary

326Liverpool City Council v. Irwin [1977] AC 239.

327As it was, for instance, by the House of Lords in the Scottish appeal McKay v. Dick and Stevenson (1881) 8 R (HL) 37, 40, per Lord Blackburn.

328The DCFR specifies in contracts for services various ‘rules’ concerning cooperation between the parties: see Art. IV. C.- 2:103. The stipulation of these obligations as ‘rules’ seems to underline their fundamental nature to the contractual relationship, and suggest that their importance goes beyond the presumed will of the parties.