Common trade practice CASES

In English contract law, common trade practice refers to standard terms or conditions widely recognised and used within a particular industry, which may be implied into agreements even if not expressly included.

Definition and Application

When parties operate within the same trade and share equivalent commercial standing, courts may incorporate customary terms into their contracts. This can happen even in the absence of a signed agreement or formal negotiation, particularly where the conduct and background of the parties indicate reliance on familiar industry norms.

Case Example: British Crane Hire v Ipswich Plant Hire (1973)

Two plant-hire companies, both experienced and of equal bargaining power, entered into a verbal agreement over the phone for crane hire. The hirer did not sign any written terms before the crane was delivered. When the crane became stuck and recovery was costly, the owner sought indemnity under their standard terms. The court held these terms were incorporated into the contract based on the parties’ shared understanding of industry practice, despite the lack of formal documentation.

Why It Matters

Common trade practice enables business agreements to function smoothly and consistently, reducing the need for contractual minutiae in every transaction. It offers efficiency and predictability, especially in industries where certain terms are ubiquitous and well-understood.

Limitations and Considerations

This principle applies primarily between experienced commercial parties with equal bargaining power. It may not extend to consumer contracts or where terms are unexpectedly onerous or unusual. Courts approach such cases with caution, balancing fairness with commercial certainty.