Main Body

2. Implied Terms and Consumer Guarantees

“If, in order to make an agreement work, or, conversely, in order to avoid an unworkable situation, it is necessary to imply a term; if moreover implication of that term corresponds with the evident intention of the parties underlying the agreement, the law not only can but must imply the term.”[1]


There are five bases upon which terms may be implied into contracts. Terms may be implied:

(1) by reference to the nature of the contract

(2) to make the contract effective

(3) by custom or trade usage

(4) as a result of previous dealings, or

(5) by statute.


This Chapter discusses all these five bases for implying terms, as well as what terms may be implied.


Furthermore, the abandonment of the TPA and the introduction of the ACL meant a change from implied terms to so-called consumer guarantees. In other words, while the TPA, like the SGA, contained implied terms, the ACL does not include any implied terms. Instead, it contains a set of consumer guarantees. However, as these consumer guarantees are very similar to the SGA’s implied terms, both in scope and in function, they are discussed in this chapter.

  1. Dissenting judgment of Lord Wilberforce and Lord Morris of Borth-y-Gest, BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1978) 180 CLR 266, at 292.


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Svantesson on the Law of Obligations Copyright © 2022 by Dan Svantesson is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License, except where otherwise noted.