In a ruling relating to the tenancy of agricultural land granted by the Secretary of State for Defence and whether the parties had agreed that a rental figure should be assessed on review, the High Court has ruled that, when deciding whether a provision should be implied into a contract, knowledge of clear and well-known legal principles may be attributed to the parties to that contract, even if the parties were not aware of those principles.
Attributing that knowledge to the parties allowed the High Court to imply a term. In this particular case, the High Court stated that if its ruling went any other way the tenant would receive a “windfall” that was not intended or expected, although the facts of this case were specific. The legal principle attributed to the parties here was that adding to the property covered by a tenancy would constitute the grant of a new lease. The High Court ruled that this was part of the knowledge available to the reasonable observer of the contract.
This ruling sets out a clear principle about implying terms into contracts in general – clear and well-established legal principles are attributed to the parties of a contract in deciding whether to imply a term into that contract.