Authors: Daniel Kalderimis, Nicola Swan
Published: 28 April 2023
Pages: 26

Introduction

In Bathurst Resources Ltd v L&M Coal Holdings Ltd the Supreme Court took the opportunity to clarify the law of implied terms in New Zealand. From the outset, the Court had stated its interest in the “the distinction between interpretation and implication and the appropriate test for the latter”. The purpose of this paper, and the associated NZLS CLE seminar, is to explore the landscape of implied terms following the Court’s decision.

On one view, this should not take long. Implied terms are an established part of the machinery of contract law, with which practitioners are well familiar. This perspective would suggest a quick refresher on the modern methodology to be applied.

On another view, implied terms are a little like art: while we are confident we will know one when we see it, there are many examples of judges differing on what it is they do see. Eminent jurists have often disagreed on whether or not to imply a term, and even on whether, in reading words into a contract, implication is what they are doing. As the Right Honourable Sir Tipping recently put it, “[t]he concept of an implied term is based on the proposition that the term is necessarily implicit; but implicit in what?” In Aberdeen City Council, Lord Hope even commented that the term to be implied was the product of his interpretation of the contract, whilst Lord Clarke in the same decision preferred to imply a term to reach the same end. (Continued...)
 

Content outline

• Interpretation vs implication
• The Supreme Court’s approach to implying terms in Bathurst
• The modern BP Refinery test in practice