NEWS
2021-04-23

Implied terms

Thus far it may have been assumed that terms must be express, oral or written declarations of the obligations undertaken. Although contracts may arise solely by implication from conduct most contracts in Germany do in fact rest upon statements made by the parties and hence most contracts do contain express terms, however few. But terms may also be implied. All agreements are made in the light of circumstances known to the parties and these circumstances may bear upon the agreement as being a tacitly accepted part of it; terms that are understood but not declared.
Terms may be implied for any number of reasons, the basis of the implication being that the parties may be taken to have tacitly agreed to them. There are, however, certain common sources of implication. One such source is usage: where a contract is made between people of the same trade it may usually be assumed that it is to be conducted against the accepted background of that trade or where a contract is made in a particular locality it may be assumed that it is made in the light of the customs of that locality: hence the usage may be treated as being incorporated into the contract. Further, there is doctrine known as the rule, by which the German courts will at times imply a term where it is necessary to do so in order to give the contract business efficacy. For example, the plaintiff's ship was berthed under contract at the defendant's wharf; at low tide it settled on some rock which lay under the river bed and it was damaged. There was nothing in the contract about the safety of the berth but it was held that it must be assumed as a business proposition that the parties had contracted upon the basis that it was sound. This doctrine is, within limits, clearly a reasonable one but current German judicial practice is to apply it with caution, since the courts shrink from making people's contracts for them after the event.
Hence, today it is probably true to say that lawyer's doctrine will only be called into use where what has been omitted from the express terms is something which anyone would have assumed to be basic to the agreement, and which the parties themselves would clearly have expressly agreed to had they thought about it. Moreover, no such term will be implied if it contradicts the express terms of the contract.
Again terms may be implied by law, either by general rules of the German law itself or by statute.
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