Implied terms in contracts for services

Where professional (or even non-professional) services are being provided, certain terms are implied into the contract for services under the Supply of Goods and Services Act 1982 (or “SGSA 1982”). This post will take a look at the following 3 elements:

  1. In what circumstances does the Supply of Goods and Services Act 1982 apply?
  2. What terms does the SGSA 1982 imply?
  3. What other terms are generally implied into contracts for services?

A worked example will then be used to illustrate the application of the law to the facts.

The particular terms implied will be investigated in further posts.

In what circumstances does the Supply of Goods and Services Act 1982 apply?

The SGSA 1982 is implied into any contract for services. The relationship between the parties is immaterial so it can apply to:

  • Business to business contracts
  • Business to consumer contracts
  • Consumer to consumer contracts (Chaudry v Prabakhar [1982])

However, the implied terms cannot come into effect if there are no express terms – the SGSA 1982 doesn’t attempt to control the whole contract. There may also be terms implied into the contract under common law.

What terms does the Supply of Goods and Services Act 1982 imply?

The SGSA 82 implies three main terms:

  1. That the work will be carried out with reasonable care and skill
  2. That the work will be carried out within a reasonable time
  3. That the work will be carried out for reasonable payment

Generally, what is reasonable in the circumstances depends on the particular facts of the matter at hand.

What other terms may generally be implied into a contract for services?

  • That neither party will attempt to gain an unfair advantage over the other when consideration is controlled by a third party
  • Where there is no express term relating to termination that a contract for service may be terminated where reasonable notice is given
  • That a contracting party that has breached the contract should inform the other party (or parties) of his breach

Worked example

Andy, a freelance graphic designed, agrees to supply a graphic design to Bulldog Ltd. Bulldog Ltd design and construct skateboards for  professionals and they have been contracted by Chris (a professional skateboarder) to provide a new skateboard to him within one month.

There’s no written contract between Andy and Bulldog Ltd but Bulldog Ltd stipulated that they want the graphic design provided to them within 2 weeks. This is a big chance for Andy and he doesn’t want to muddy the water by asking how much he will be paid. Unknown to Andy, Bulldog Ltd have also contracted with Dave to fulfil another element of the design process. However, Dave has fallen ill and Bulldog Ltd have panicked. They demand that Andy provide them with the preliminary graphic design sketches within 3 days. Flustered, Andy has to hurry to meet the deadline and doesn’t produce his best work. Bulldog Ltd are extremely unhappy and tell him that they won’t pay for his work.

Andy has a remedy under the SGSA 1982. He has attempted to provide his work with reasonable care and skill in the particular constrained circumstances. He is also under a duty to provide the services within a reasonable time and should be paid a reasonable amount to do so. He has provided the work within a reasonable time (in the circumstances) and is entitled to be paid a reasonable amount.