Implied Terms System In Contract Law

In the whole theory of contract law, the terms of the contract plays a role of connecting. It connects the validity and utility with the performance and remedy of the contract, and thus it is very important. The implied terms system of the common law has developed for a long time. The system has played an inestimable rolein promoting the settlement of their contract dispute and the promotion of its economic development. However, our country hasn't attached enough importance to the theory so far. We hold the opinion that our country should conduct detailed research of this theory, make an appropriate transformation of it and make it in line with China's existing legal system, which will solve the problem more effectively in Chinese judicial practice. Meanwhile, due to the powerful advantage of the Law and Economics in descriptive and the normative theory, our efforts should be under this approach.Specifically,this paper is divided into the following five parts:The first part is incomplete contracts and its amendments to principle of freedom of contract. Because of limited rationality, transaction costs and the existence of opportunistic behavior, in real life, a large number of incomplete contracts appeares. The concept of incomplete contract has caused a profound impact to the traditional idea of autonomy of will and the principle of freedom of contract. The contract has gradually become a mixture of parties consent and the law. Court has not merely established the meaning of the contract on parties consent, but has expanded the vision to all aspects of the contractual relationship, treated it dynamically and then complemented contractual rights and obligations for the parties through the corresponding resolution system of incomplete contractual. In common law countries, the implied terms system is the corresponding system of resolving the incomplete contract.The second part is the source and type of implied terms. Common law judges use the "implied terms"to supplement the lack of content in incomplete contract. Because the judge should not conclude the contract for the parties directly, then filling the gap of the contract should also reflect the will of parties. And therefore, the judge have to deny that his acts of filling the gap of contract is reestablishing the contract for the partyt, but explore implicit or implied agreement or the terms of the contract,also known as implied terms. According to the basis of adding implied terms,it can be divided into three categories: terms implied in fact, terms implied by law and terms implied by custom.And terms implied by law can be divided into terms implied in case law and terms implied by statute.The third part is the economic analysis to the relevance theory of the implied terms. Through the study of terms implied in fact, terms implied by law and terms implied by custom,we can see that the substantive way of thinking in adding implied terms by court is that of law and economics. With the approach of law and economics,not only the traditional normative theory of implied terms is simplified, but also people's thinking is saved.The fourth part is the contents and categories of default rules. The terms added to the contract by Court has traditionally been known as "implied terms", and the meta-rule before the formation of the implied terms is often referred to "default rules",which includes the default rules of legislation and the default rules of justice. According to the reasons of the incomplete contract, default rules can generally be divided into two categories: the majority rules and the penalty default rule.The fifth part is the design of default rules. There are there kinds of normative theories of default rules, including consent theory that establishes the default rules on a desired subjective agreement, conventionalist that establishes the default rules on the basis of "customary norms",and efficiency that establishes the default rules from the perspective of law and Economics. By comparing the three competing theories, only the approach of laws of economics is able to put forward a convincing normative theory.