IMPLIED TERMS AFTERBELIZE TELECOM

Abstract

It is five years since Lord Hoffmann delivered the advice of the Privy Council in Attorney-General of Belize v Belize Telecom Ltd. In that landmark decision, Lord Hoffmann assimilated contractual interpretation and implication with the result that when implying a term in fact the court must ask a single question: “is that what the instrument, read as a whole against the relevant background, would reasonably be understood to mean?” It might have been thought that five years was enough time for the English courts to come to terms with this approach. Belize is regularly cited in the courts, but the judges appear to struggle with its application. There remains uncertainty as to the roles (if any) to be afforded to the traditional “business efficacy” and “officious bystander” tests, and the requirement of “necessity”. This article seeks to re-evaluate Belize five years on. It concludes that Belize provides a doctrinally coherent and workable basis for identifying and giving effect to the intention of the parties through the implication of terms. However, the article questions whether it remains necessary, or even helpful, to continue to make reference to tests based on “business efficacy” or the “officious bystander”, as the tests distract from the central idea advanced by Lord Hoffmann and have led to uncertainty in its application.

Implied terms again, or how Lord Hoffmann got treated in Marks & Spencer

“…It is suggested that, all things being equal, we should opt for the superior theory even if it will not change practice. Lord Hoffmann’s dicta in Belize Telecom represent a principled account of what courts do when they imply-in terms, which promised to bring ‘doctrinal coherence to interpretation and implication’ (Hooley, 2014). Crucially, it provides not just a test for when courts should do so, but a justification for their doing so.…”