Implied terms – not easy where the details haven’t been ironed out yet
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In Baturina v Chistyakov the High Court refused to imply a term into a joint venture general framework agreement, which contained only outline terms, that the funding advanced by the claimant be used only for the purposes of the joint venture projects.
The decision relates to a “bitter” commercial dispute between two wealthy Russian entrepreneurs over a joint venture for Moroccan property development projects that went sour.
Amongst other arguments, Ms Baturina sought to imply a term into the agreement that all financing advanced by her under the agreement was to be applied “exclusively for the purposes of the Projects.”
The judge acknowledged that the question of implied terms falls to be determined on the facts of each case and the particular contract in question, noting that there was “no parallel” between the detailed commercial lease considered in the Supreme Court authority on implied terms, M&S v BNPP, and the general framework agreement before her. The agreement was drafted in high-level terms only and provided no particulars as to how the projects were to be run.
The judge found that it would be wrong to expand the agreement beyond its intended purpose, namely to be a headline overview of the basis on which the parties agreed to go forward, and to imply into the agreement details that the parties could be taken to have omitted deliberately at the time.
The judge also raised concerns about the lack of specificity of the implied term sought, which the judge considered was an “elastic” concept in the context of very risky and complex dealings in Moroccan property development.
As we have said in previous blog posts, it’s not getting any easier for anyone arguing for an implied term, but, as this decision illustrates, it’s even harder for those seeking to imply terms into high-level agreements where the details are still to be agreed.