Research On Implied Terms In Anglo-American Contract Law

In the marketing transactions, the parties of the contract always try to make their expecting purpose to be satisfied to the largest degree. However, the existing of personal limited rationality and transaction cost always leads to the appearance of incomplete contracts with incomplete terms. Being incomplete is a general state of the contract. With the development of the commodity economy, people find that solely relying on the terms of the contract to determine the rights and obligations of the parties can no longer go to meet the growing of the complicated modern economic life. In order to reach a more reasonable way to determine the rights and obligations of the parties, implied terms of the contract emerged as a response system. The existence and application of implied terms has important theoretical and practical significance. The judges use implied terms to remedy the contract, making a vague contract into a clear one and ensuring the parties getting their expected commercial interests. The paper is based on the in-depth study and understanding of the implied terms, introducing its theoretical essence to Chinese contract law, with the expectation of promoting the thinking update of Chinese contract law which is deeply affected by the Continental Law System.The paper is divided into four parts.The first part makes an overview of the implied terms of the Anglo-American Law system. Because of the influence of liberalism contract, implied terms have not been developed in the classical period of contract law. It only can be found in the judicial practice in that period. Since 1870, the idea of liberalism contract declined, implied terms gradually developed during this period. From the year of 1980, the idea of liberalism contract rehabilitated, and the development of implied terms were hampered. The function of implied terms is to fill the gaps of a written contract and meet the policy of protecting one of the parties. The implied terms, with the principle of good faith as its theoretical source, include statutory implied terms, implied terms in fact and customary implied terms.The second part makes an analysis of the type of implied terms. Statutory implied terms refers to certain statutory provisions of the contract added to a contract as implied terms. It is based on regulation of certain typical contracts. Under the conditions of statutory implied terms, the implied terms applied in a case are often the conclusions drawn from many similar cases in the past. These conclusions have gradually become a part of certain contractual relationship. It is the result of practical accumulation, and it has a lot of advantages compared to implied terms in fact. The biggest difference between implied terms in fact and statutory implied terms and customary implied terms is that the implied terms in fact are used in atypical contracts. The implied terms in fact is implied content inserted in a contract in accordance with the specific conditions, which is decided by the Court. It does not have general applicability. Early precedents established two restrictive rules applying in implied terms in fact: officious bystander test and business efficacy test. Customary implied terms refers to that the common practices in a certain place or a certain industry was treated as the implied terms must be complied by the two parties.The third part analyzes the relationship between express terms and implied terms. The parties of the contract always try to make their expecting purpose to be satisfied to the largest degree. However, in the contracting process, it will inevitably produce a variety of errors, including contract costs. The parties combined express terms and implied terms rationally, so they can overcome contract mistakes cost, and bring the contract function into full play. The implied terms, whose function is the same with express terms, can restrain the contract parties. Generally, the effect of express terms is much powerful than implied terms. However, in certain circumstances, the parties can not exclude the application of certain implied terms in their agreement.The fourth part makes a comparison and analysis of implied terms in Anglo-American Law and complementary interpretation system of contract in Continental Law. Through the establishment of implied terms, the Anglo-American Law system fills the vacancies of the parties'means by forming implied terms in the gaps of incomplete contracts. The supplementary interpretation of the contract in the Continental Law is not the same with the implied terms in the Anglo-American Law in scope. But it has the similar principles, values and functions with the implied terms system. Both of them break the absolute party's autonomy, enable the court to intervene the contract in order to resolve the dispute between parties. Meanwhile, they can make good balance between the interests of the court and parties. In China, we take the complementary system of contract gaps as the contract dispute resolution mechanism. Through studying the restriction rules of judges in the implied terms system in Anglo-American Law, we can make a better mechanism for resolving contract disputes in China. We can provide effective ways and means for the judges to supplement the gaps of contracts, make standardization for the judges'discretion. From a macro perspective, it can help achieve greater efficiency and effectiveness of business, achieve a better fit with law and economic.