Implied Terms In Construction Contracts

• Published date: 24 July 2023
• Subject Matter: Corporate/Commercial Law, Real Estate and Construction, Contracts and Commercial Law, Construction & Planning
• Law Firm: Vincent Young
• Author: Vincent Young
• topic: Construction Law,Contracts

When nothing is something

Construction contracts in Australia consist of both express and implied terms. Express terms are clearly stated and agreed upon by the parties involved. Implied terms, on the other hand, are "unspoken" but still considered part of a construction contract.¹

This article will consider the concept of implied terms in Australian construction contracts, their legal basis, types and significance in shaping project outcomes.

What are implied terms?

Implied terms form an essential part of the contract and are legally enforceable in principle. Courts either infer these terms to give effect to the parties' intentions or read them into the contract by the operation of law.² Implied terms in construction contracts derive their legal foundation from common law, statute, and custom:

• Implied by fact: these terms are necessary for giving effect to the parties' intentions and are inferred based on their conduct and surrounding circumstances³;
• Implied by law: these terms are imposed on the parties by courts or statutes, regardless of their intentions. An example includes the implied warranties in a residential contract under section 18B of the Home Building Act 1989 (NSW) and
• Implied by custom: these terms become part of a contract due to established practices and usages in a specific...