Express contract terms continue to provide best protection for parties to a contract

23 / 03 / 2017

The Court of Appeal has reaffirmed that a term will not be implied if it contradicts an express term under the contract (Irish Bank Resolution Corp Ltd (In Special Liquidation) v Camden Market Holdings Corp [2017] EWCA Civ 7)


Irish Bank Resolution Corporation Limited (Irish Bank) provided a banking facilities agreement to Camden Market Holdings Corp (CMHC) for the redevelopment of Camden Market. The agreement expressly permitted Irish Bank to assign or transfer any of its rights under the facility agreement and in order to do so, it was allowed to disclose information about CMHC and the loan to potential assignees.

Irish Bank went into special liquidation and began to market some of its loans. In one portfolio they included CMHC’s loan together with a number of distressed loans. CMHC’s loan was performing and it argued that by marketing its loan in a portfolio with distressed loans, purchasers were incorrectly assuming that CMHC’s loan was in default.  At the same time as Irish Bank was marketing the loan, CMHC were in the process of marketing properties at Camden Market for sale.

CMHC argued that potential buyers of the properties were attempting to acquire the loan from Irish Bank with the intention of enforcing the loan and obtaining the properties at less than their market value, rather than purchasing the properties directly from CMHC.

Proceedings were commenced by CMHC against Irish Bank, who claimed that the facilities agreement contained an implied term that Irish Bank would not do anything to hinder CMHC’s ability to market its properties.

Court of Appeal decision

The court confirmed that the starting point when considering an implied term is first to give effect to the parties’ intentions in the express terms of the contract.

Implying an obligation on Irish Bank not to do anything that would hinder CMHC’s marketing of its properties was contrary to the express right of Irish Bank to market its loan by disclosing information on the borrower.  The court reiterated the “cardinal rule” (established by Lord Neuberger in Marks and Spencer Plc v BNP Paribas) that an implied term must not contradict an express term.

This case describes two different ways in which an implied term could be inconsistent with an express term:

(1) direct linguistic inconsistency; and

(2) substantive inconsistency.

The court ruled that there was no linguistic inconsistency between the express term under the facilities agreement and the implied term being argued by CMHC, as there could be situations where the marketing of the loan by Irish Bank was not in competition with CMHC’s marketing of Camden Market.

However there was substantive inconsistency, as the implied term could significantly restrict Irish Bank’s ability to assign its loan.

Irish Bank’s appeal was allowed and the court concluded that CMHC’s case was bad in law and had no real prospect of succeeding.


This case illustrates the reluctance of the courts to imply a term into a contract that has been negotiated and considered by the parties.

It is a reminder of the paramount importance of clear and precise drafting in contracts. The intentions of the parties should be carefully considered at the outset and documented in any contract.