Mediterranean Salvage & Towage Ltd v Seamar Trading & Commerce Inc  EWCA Civ 531 (10 June 2009). In considering whether a term should be implied into a charterparty that the charterers must nominate a safe berth, the Court of Appeal revisited the recent analysis of implied terms in Attorney General of Belize v Belize Telcom Ltd in  UKPC 11. In that Privy Council case Lord Hoffmann distilled various formulations of the test for implied terms down to one question: “Is that what the instrument, read as a whole against the relevant background, would reasonably be understood to mean?” In applying that test, Sir Anthony Clarke MR in this latest case suggests that whilst Lord Hoffmann was emphasising that implication is part of the process of construction, he did not resile from the proposition that it must be necessary to imply the proposed term.
As noted by Sir Anthony Clarke, Lord Hoffmann also stated that how the actual parties would have reacted to the proposed amendment was irrelevant and it was necessary for the implied term to be obvious in the sense of being immediately apparent. Nonetheless, Lord Hoffmann stressed that the following conditions must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) “it must be so obvious that it goes without saying”; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.
Lord Hoffmann also said that this list should not be regarded as a series of independent tests “but rather as a collection of different ways in which judges have tried to express the central idea that the proposed implied term must spell out what the contract actually means, or in which they have explained why they did not think that it did so”.
The question in Sir Anthony Clarke’s view was therefore whether the proposed implied term was necessary. In his view, it was not. The fact that the charterers were under a duty to nominate the berth did not mean that they warranted that the berth was safe. If there was an implied warranty, it was not a warranty of any width. Moreover, an implied term would be inconsistent with express terms in the contract.