Marks and Spencer Plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd [2015]
Share
Marks and Spencer Plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd [2015] UKSC 72, is a significant English contract law case that dealt with the implication of terms in commercial contracts, particularly business tenancies.
Marks & Spencer (M&S) subleased 'The Point' in Paddington Basin, W2, from BNP Paribas. M&S claimed there should be an implied right to recover money paid under its lease when it exercised the right to terminate. The rent, including a basic rent, premium, VAT, service charge, and car park license fee, had to be paid quarterly. M&S exercised its right to terminate on 24 January 2012, giving six months' notice, and then claimed a refund for the period from 25 January to 24 March 2012. The main issue was whether there should be an implied term in the lease allowing M&S to recover the extra portion of rent paid for the period after the termination date.
The Supreme Court held that the term to recover the extra portion of rent should not be implied. The Court discussed the conditions for implying terms, referencing Lord Hoffmann's views in AG of Belize. The conditions included reasonableness and equitableness, necessity for business efficacy, obviousness, capability of clear expression, and no contradiction with express terms.
Lord Neuberger emphasised that reasonableness and equitableness were not additional requirements if the other conditions were satisfied. He also highlighted that necessity for business efficacy involves a value judgment, and it is not an absolute necessity.
The Court rejected the implied term, stating that the contract's clear and consistent understanding was that rent payable in advance was not apportionable in time. The lease was professionally drafted, and there was no express provision for such apportionment.
The case reaffirmed the stringent conditions for implying terms into contracts. It emphasised that a term should not be implied merely because it seems fair or because the parties might have agreed to it if suggested. The judgment clarified the approach to implication of terms and its relation to the overall construction of a contract. It highlighted the need for clear evidence or express words to imply a term that contradicts the established understanding of the contract.
This case remains important in the realm of contract law, particularly in discussions around the implication of terms and the criteria that must be met for such implications to be valid.
Marks & Spencer (M&S) subleased 'The Point' in Paddington Basin, W2, from BNP Paribas. M&S claimed there should be an implied right to recover money paid under its lease when it exercised the right to terminate. The rent, including a basic rent, premium, VAT, service charge, and car park license fee, had to be paid quarterly. M&S exercised its right to terminate on 24 January 2012, giving six months' notice, and then claimed a refund for the period from 25 January to 24 March 2012. The main issue was whether there should be an implied term in the lease allowing M&S to recover the extra portion of rent paid for the period after the termination date.
The Supreme Court held that the term to recover the extra portion of rent should not be implied. The Court discussed the conditions for implying terms, referencing Lord Hoffmann's views in AG of Belize. The conditions included reasonableness and equitableness, necessity for business efficacy, obviousness, capability of clear expression, and no contradiction with express terms.
Lord Neuberger emphasised that reasonableness and equitableness were not additional requirements if the other conditions were satisfied. He also highlighted that necessity for business efficacy involves a value judgment, and it is not an absolute necessity.
The Court rejected the implied term, stating that the contract's clear and consistent understanding was that rent payable in advance was not apportionable in time. The lease was professionally drafted, and there was no express provision for such apportionment.
The case reaffirmed the stringent conditions for implying terms into contracts. It emphasised that a term should not be implied merely because it seems fair or because the parties might have agreed to it if suggested. The judgment clarified the approach to implication of terms and its relation to the overall construction of a contract. It highlighted the need for clear evidence or express words to imply a term that contradicts the established understanding of the contract.
This case remains important in the realm of contract law, particularly in discussions around the implication of terms and the criteria that must be met for such implications to be valid.
