Officious Bystander Test CASES
In English contract law, the Officious Bystander Test is a method courts use to determine whether a term, not explicitly stated, should be implied into a contract based on presumed intention.
Definition and Principles
This test considers whether, if a neutral observer (an “officious bystander”) suggested including a specific term during contract formation, the parties would have readily agreed, saying “Oh, of course!”. If so, the term may be implied by the courts.
Key Case Example
- Shirlaw v Southern Foundries (1926) Ltd [1939]: Established the officious bystander test, holding that an implied term must be obvious and clearly intended by both parties at the time of contract formation.
Legal Implications
- Applies only to terms so obvious they require no explicit mention.
- Implied terms must reflect mutual, unspoken agreement rather than judicial intervention.
Practical Importance
Understanding the officious bystander test assists in interpreting contracts, highlighting the importance of clearly documenting contractual terms to prevent unintended implications.
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A company appointed a managing director for a ten-year term. After a takeover, the company's articles were changed, enabling his removal. The court held this was a wrongful dismissal, implying a term that the company would not prevent his service. Facts In December 1933, the plaintiff, Mr Arthur Shirlaw, was appointed as the managing director of Southern Foundries (1926) Ltd (‘Southern’) for a fixed term of ten years. The appointment was made under an agreement. In April 1936, another company, Federated Foundries Ltd (‘Federated’), acquired the shares of Southern. Federated then altered Southern’s articles of association, adopting a new set
