+ Implied Terms in Contracts

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Centrestage Management Pty Ltd-v-Riedle [2008] FCA 938

This case involves a dispute about a contract for the supply of a computer program. One issue that fell to be determined was whether a licence to used the "application" included the implied right to access and use the source code. It was contended that a contract for the supply of a computer program carries with it an implied licence to use the program and call for the source code.

There are a number of rules that have to be satisfied before a court will imply any term into any agreement. One is that the term must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it. The term must be needed in order to make the agreement work or conversely in order to avoid an unworkable situation.

In the above case, common sense prevailed and it was held that no such term as that contented could be supported on the business efficacy basis.

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