The Courts Imply Terms from the Factual Context in Order

question 6

Multiple Choice

The courts imply terms from the factual context in order to give effect to what courts perceive as the unexpressed intention of the parties. The idea is that, whether through forgetfulness, lack of time, or bad drafting, the parties failed to include a term which they would have done if they had thought about it. Which test do the courts apply when implying terms in fact?

• A) A term will be implied in fact where the courts deem it necessary to give business efficacy to the contract
• B) A term will be implied in fact where the court deems it reasonably necessary, having regard to the context and the price.
• C) A term will be implied in fact where the courts deem it reasonable in order to achieve a fair and practical allocation of risks between the parties.

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Definitions:

Owner's Equity

The residual interest in the assets of the entity after deducting liabilities, representing the ownership interest of shareholders.

Cash Payment

A transaction that involves the immediate transfer of cash from the buyer to the seller for the purchase of goods or services.

Liabilities

Financial obligations or debts that a company owes to others, which must be paid back in the future.

Debts Owed

Amounts of money that are required to be repaid by an individual or organization to creditors.