Saturday 13 April 2019

What is penta-test for interpretation of implied terms of contract?

 In the said decision, the Supreme Court further held that implied terms could be read into a contract only in exceptional cases, where the following “penta-test”, postulated by Lord Simon of Glaisdale in BP Refinery (Westernport) Pty Ltd. v. Shire of Hastings (1977) 180 CLR 266, 282-283:
“(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that ‘it goes without saying’ (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.”
In the High Court of Delhi at New Delhi
(Before C. Hari Shankar, J.)

Parsoli Motors Works Private Limited  v. BMW India Private Litmited .

O.M.P. (I) (COMM.) 559/2017
Decided on January 15, 2018, 
Citation: 2018 SCC OnLine Del 6556
Read full judgment here: Click here
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