Court of Appeal considers test for implied terms

The Court of Appeal has held that a bank’s express power to market a loan was not subject to any implied qualification that such marketing should not interfere with the borrower’s attempts to get the best price for property purchased with the loan. In so ruling, the court reaffirmed that the starting point for a court when considering the existence of an implied term to reflect the parties’ intentions is the express terms of the contract and that the pleaded implied term must not contradict any express term. The case is of interest because it discusses how an implied term may be linguistically consistent with the express terms of a contract but, fatally, substantively inconsistent with them. (Irish Bank Resolution Corp Ltd (In Special Liquidation) v Camden Market Holdings Corp [2017] EWCA Civ 7)

SUMMARY

The Court of Appeal has held that a bank’s express power to market a loan was not subject to any implied qualification that such marketing should not interfere with the borrower’s attempts to get the best price for property purchased with the loan. The bank was marketing the loan as part of a package which included distressed debt and the borrower was concerned that this might negatively impact the price it could get for property bought and developed with the loan.

In so ruling, the Court of Appeal reaffirmed that the starting point for a court when considering the existence of an implied term to reflect the parties’ intentions is the express terms of the contract and that the pleaded implied term must not contradict any express term. The case is of interest because it discusses how an implied term may be linguistically consistent with the express terms of a contract but, fatally, substantively inconsistent with them. (Irish Bank Resolution Corp Ltd (In Special Liquidation) v Camden Market Holdings Corp [2017] EWCA Civ 7)

Practical Law 31.1.17