The Moorcock - Case Note
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The Jolly Contrarian Law Reports
from the Contrarian’s Bench Division.
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The origin of the “business efficacy” test for implying terms in a contract.
The case
Plaintiff ship-owners contracted with the defendant wharf owner to discharge a ship at their jetty on a tidal stretch of the River Thames where, at low tide, boats would regularly ground. The defendants had no rights or control over the river-bed, took no steps to determine whether it was safe and, at low tide, the Moorcock’s hull was damaged upon grounding. The plaintiffs claimed for breach of contract, seeking to imply a term that the river bed was safe.
The defendants contended there was no express term obliging them to ascertain the state of the river-bed, no implied warranty that it was a safe, nor had there been any representation that it had been checked.
The ship-owners argued it must have been an implied term of the contract that the river-bed was safe, because the jetty could not be used at all without the vessel grounding at low water. The defendants must be held to have warranted they had taken reasonable care to ascertain the river-bed was safe for the ship to lie on.
Outcome
The Moorcock’s owners won their claim. The whole purpose of the contract was to use a jetty that could not be used without the vessel grounding. There must, therefore, be an implied warranty that the defendants had taken reasonable steps to ensure the vessel could ground without suffering damage.
Per Bowen LJ:
“In business transactions such as this, what the law desires to effect by the implication is to give such business efficacy to the transaction as must have been intended at all events by both parties who are business men [...] to make each party promise in law as much, at all events, as it must have been in the contemplation of both parties that he should be responsible for.”
“Now, an implied warranty, [...] as distinguished from an express contract or an express warranty, really is in all cases founded upon the presumed intention of the parties, and upon reason. The implication which the law draws upon from what must obviously have been the intention of the parties, the law draws with the object of giving efficacy to the transaction and preventing such a failure of consideration as cannot have been within the contemplation of either side; and I believe that [...] it will be found that in all of [the cases] the law is raising an implication from the presumed intention of the parties with the object of giving to the transaction such efficacy as both parties must have intended that at all events it should have.”