Implicitly in the waste management business?

Allen & Overy LLP

Allen & Overy LLP

The High Court has provided another reminder of how exacting the test is for implied terms. Even if you are in the waste management business.

Neath Port Talbot received about 100 trucks per day of domestic waste and recyclable material to a site in Swansea. It needed service providers to take away both the recyclable material and the rubbish from the site. James Heys won a tender to provide that disposal service. The parties entered into a contract requiring James Heys to remove 30,000 tonnes of material, but in the end it removed only about 6,000 tonnes before the contract was terminated.

Neath Port Talbot claimed for breach of contract, seeking to recover the additional costs it incurred using other, more expensive, third parties to take the rubbish away instead. James Heys counterclaimed that there was an implied term that Neath Port Talbot would provide adequate notification of its requirement for collection, which Neath Port Talbot breached, arguing Neath Port Talbot instead chose to use other third parties and did not leave James Heys enough rubbish to remove.

The court found that there was no such implied term. The Supreme Court had confirmed that a term is only implied if it is necessary to give business efficacy to the contract or is so obvious it goes without saying. That could not be the case here: the nature and source of the waste to be collected meant there was bound to be a steady stream needing disposal, so it couldn’t be necessary for Neath Port Talbot to notify James Heys of the need to collect. It was also implausible to suggest that Neath Port Talbot was voluntarily preferring to go to other, more expensive third parties when the entire point of having run a tender was to find the cheapest third party (James Heys) to make the disposals.

Judgment: Neath Port Talbot v James Heys

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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