When your lawyer draws up a contract of sale on your property, it's vital that he or she includes all the relevant and necessary details to protect you. Nonetheless, it's not possible to include every possible condition, term and clause imaginable in the contract. As such, Australian law recognises that certain terms in a contract are implied. What does this mean, and how could this affect you? Find out here.
Implied term definition
A contract of sale outlines all the obligations you and the buyer have as part of the transaction. Under common law, which applies to property sales in Australia, the terms of the contract are either express or implied.
An express term is one that you and/or the buyer articulate in detail in the contract. A typical property sale contract could include hundreds of express terms, and your lawyer would make sure the details are correct in every instance. The sale price of the property is an example of an express term because both parties need to agree on this.
An implied term is one that you do not include specifically in the contract because common law defines these terms in such a way that you don't need to include them. For example, in a property sale contract, you wouldn't need a term that says the buyer will pay the seller in a legal currency because every sale contract relies on this principle.
Understanding implied terms
There are various ways you can understand implied terms. For example, implied terms:
- Are so obvious that you don't really need to say them.
- Are reasonable and equitable.
- Should not contradict any express terms in the contract.
While implied terms often relate to the law, you can also imply a term based on a custom. In this case, any reasonable person involved in a property sale would recognise and automatically adhere to that term, even though it is not written down in law.
The challenge for property sellers
Contractual challenges often arise for property sellers because they forget or omit an express term, which they later try to suggest was an implied part of the contract. In this type of dispute, a court will carefully consider the facts of the case before ruling that a term is implied. Crucially, if there's a dispute, a court will only rule that both parties must adhere to an implied term if you can prove that the contract could not reasonably exist without this clause, even though you didn't state it in the document.
Unsurprisingly, the most effective way to avoid a challenge like this is to make sure your property sale contract contains every detail relevant to the sale. Ideally, as the seller, you should consider every possible scenario that could affect your decision to sell and make sure your lawyer includes any relevant express terms to support this.
Implied terms lead to a lot of legal challenges with property sales in Australia. Talk to trained property lawyers for more advice and information about what you need to include in a contract and what may already be implied. .
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