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Questions and Answers
What is a universal implied term in a contract?
What does the universal duty of co-operation require from contracting parties?
In the case of Secured Income Real Estate v St Martins, what did SI do to fulfill the contract?
What was the ruling regarding SM's rejection of SI as a tenant?
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Which type of implied terms are unique to specific classes of contracts?
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In legal terms, what does the duty to co-operate specifically help achieve?
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What is the implication of an ad hoc implied term?
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Which case exemplifies the universal duty of co-operation?
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Study Notes
Implied Terms: Overview
- Contracts include both expressly agreed terms and implied terms, which supplement the express terms.
- Implied terms can be categorized as:
- Universal Implied Terms: Applicable to all contracts, such as the common law duty of co-operation.
- Generic Implied Terms: Specific to certain classes of contracts, e.g., relationships like doctor/patient (Breen v Williams) or legislative provisions (Goods Act 1958 (Vic)).
- In Fact (Ad Hoc Terms): Fill gaps in specific contracts; exemplified by Moorhead v Brennan.
Universal Duty of Co-operation
- Implied in all contracts, requiring parties to assist each other in achieving the contractual benefits.
- Parties must act reasonably in fulfilling this duty.
- Example case: Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd illustrates this principle.
Case Example: Secured Income v St Martins
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Facts:
- SI sold an office block to SM with an outstanding payment of $170,000 post-settlement.
- Contract stated payment could be reduced if total rents fell below a designated threshold.
- Rents collected were insufficient, prompting SI to propose leasing part of the property to boost rental income.
- SM rejected the leasing offer, leading to a zero reduction in the owed amount and a lawsuit for breach of duty.
Issue and Decision
- The central issue was whether SM's refusal to accept SI as a tenant breached the implied duty of co-operation.
- The court determined that SM did not breach this duty.
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Description
Explore the crucial concepts of implied terms within contracts, focusing on universal implied terms that apply to all agreements. This quiz will guide you through the nuances of contract terms and the duty of co-operation as established by common law. Test your understanding of these fundamental principles in business law!
