All too often contractual disputes come about because there is no express term of the contract which deals with the situation at hand. In such circumstances, the courts are frequently called upon to consider whether a further term should be implied into the contract.
In its recent judgment in Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Limited and another, the Supreme Court has provided welcome clarity on the restrictive test that must be met before the courts will imply a new term into a contract.
The case concerned an attempt by Marks and Spencer (“M&S”) to recover overpaid rent from one of its landlords. Under the terms its lease with the landlord, M&S paid quarterly rent in advance. Part way through a quarter, after having paid the full quarter’s rent in advance, the lease came to an end as a result of M&S exercising a break clause. The dispute turned on whether there should be implied into the lease a term (as contended for by M&S) that required the landlord to pay back the rent paid for the portion of the quarter falling after the date of termination.
At first instance, this question had been decided in favour of M&S; that decision was subsequently overturned by the Court of Appeal, leading M&S to appeal to the Supreme Court.
The Supreme Court unanimously dismissed M&S’s appeal. In doing so, it confirmed that terms can be implied into a contract only where necessary for business efficacy or where it would be so obvious as to go without saying.
The court highlighted that the judgment of Lord Hoffmann in Attorney General of Belize and others v Belize Telecom Ltd  had not altered these tests and that reasonableness was not a sufficient ground for implying a term. It found that the implied term contended for by M&S was neither necessary for business efficacy nor to make the contract coherent.
The decision reinforces that courts will not readily intervene to alter a contract by inserting new terms. This, in turn, highlights the need for clear drafting of commercial contracts in the first place.
Lord Neuberger commented that both parties were sophisticated businesses who had received ample legal advice in relation to drafting the contract; this discouraged him from implying into the contract further terms. The moral is a familiar one: the importance of clear drafting to ensure that any potential future situations are met head on. Leaving things unsaid, however obvious they may appear, is risky business
Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Limited and another  UKSC 72