The Supreme Court’s decision in Marks & Spencer v BNP Paribas Securities Services Trust Co (Jersey) Ltd1 in late 2015 reaffirmed the traditional approach to implied terms, putting to rest the suggestion made by some practitioners and academics that the Privy Council’s decision in Attorney General of Belize v Belize Telecom2 (and, in particular, Lord Hoffman’s opinion) had heralded a more liberal approach.

In Irish Bank Resolution Corporation Ltd (In Special Liquidation) v Camden Market Holdings Corp & Ors3 the Court of Appeal applied Marks & Spencer and provided a useful reminder of the principle that an implied term cannot contradict an express term of a contract.


The dispute concerned a facility agreement between Irish Bank Resolution Corporation Ltd (“IBRC”) and Camden Market Holdings Corp (“Camden Market”) and others to finance the development of properties in Camden.

When the facility was extended in 2012, the parties agreed and recorded that Camden Market’s exit strategy was to repay the loans by selling the properties.

Pursuant to Clause 26 of the facility agreement, IBRC was entitled to assign or transfer any of its rights to another bank, subject to obtaining Camden Market’s consent. Clause 26.8 said that IBRC was entitled to disclose the finance documents and information about Camden Market to any potential assignee or transferee, without Camden Market’s consent.

In February 2013, IBRC was placed in special liquidation and its liquidators began marketing its loans, some of which were distressed (although the loan to Camden Market was not) to third parties. At the same time, Camden Market was itself marketing the properties it was developing.

Camden Market became concerned that the marketing of IBRC’s loan book had the effect of creating the incorrect impression that its own loan was distressed. It was concerned that potential purchasers might prefer to acquire the loan (believing it was distressed) with a view to enforcing security and obtaining the properties for less than their market value, rather than purchasing the properties from Camden Market at market price.

Camden Market brought proceedings for a declaration that any purported assignment without their consent would breach Clause 26. IBRC confirmed that its intention was to dispose of the Camden Market loan by sub-participation only, rather than by assignment, following which Camden Market amended its case to argue for an implied term (which it claimed had been breached) that:

“[IBRC] would not do anything to hinder the marketing of the said premises to achieve the best price in accordance with the said exit strategy, by marketing the “sale” of the loans under the Facilities Agreement in competition therewith or otherwise”.

In support of this implied term, Camden Market argued that IBRC’s marketing of the loans discouraged purchasers of the properties, which would be contrary to achieving the exit strategy.

In response, IBRC applied for summary judgment (or alternatively for the claim to be struck out) on the basis that the term to be implied was inconsistent with the express terms set out in Clause 26, which entitled IBRC to market the loans for sale and provide information to any potential buyer.

IBRC’s application was dismissed at first instance and it appealed to the Court of Appeal.

Court of Appeal’s decision

Before the Court of Appeal, IBRC relied on the principle that an implied term cannot contradict an express term. Camden Market submitted that there was no contradiction, as the implied term would not prevent IBRC marketing the loans, but would only prevent marketing in competition with Camden Market’s marketing of the properties.

Delivering the only judgment, Lord Justice Beatson began by referring to Lord Neuberger’s comments in Marks & Spencer, noting that he had reaffirmed the traditional test which asks whether the term is necessary for the business efficacy of the contract and whether the parties would say “of course” when the so-called officious bystander asked whether such a term was intended. Lord Hoffmann’s comments in Belize Telecom did not change the law and should not be interpreted as relaxing the approach to implying terms.

Beatson LJ also noted that Lord Neuberger had stated that it is necessary first to consider a contract’s express terms before considering whether a term should be implied. The implication of any term should always be subject to the “cardinal rule” that any term to be implied must not contradict any express term of the contract.

Beatson LJ referred to two types of inconsistency:

1. direct linguistic inconsistency; and

2. substantive inconsistency (also referred to as incompatibility).

He accepted that there was no linguistic inconsistency between the right to market the loans afforded by Clause 26 (in particular Clause 26.8) and the term that Camden Market sought to have implied into the facility agreement.

However, he concluded that the implied term would in substance be inconsistent with the express terms of the facility agreement. It would place a “significant restriction” on IBRC’s express power to disclose information to potential buyers and was therefore substantively inconsistent with its express rights under Clause 26.8. He tested this by noting that it was difficult to construe Clause 26.8 and the proposed implied term in a consistent way.

Whilst accepting that it was not a conclusive factor, Beatson LJ also noted that the facility agreement worked without the implied term, creating “a significant impediment” to implying a term which dealt with subject matter expressly dealt with in a detailed contract.


This Court of Appeal decision once again confirms the strict approach taken by the Court when being asked to imply terms into contracts and, in particular, that a term cannot be implied in circumstances where it contradicts an express term of the contract.

When determining whether the term to be implied contradicts an express term of the contract, it is insufficient to consider only whether there is a linguistic inconsistency. Instead, the Court will consider how the pleaded implied term will, in practice, intrude upon or limit (if at all) any express powers or rights under the contract.