Terms implied from custom or trade usage.
A contract may be construed against the backdrop of an industry, profession, trade, etc, in the context of which it has been formed, with a view to importing into it a term embodying a custom or usage which is universal to this sphere of activity. The custom or usage must be proved. A usage or custom is a settled mode of conduct, or course of dealing which is general to the sphere in question. It must be notorious, in that it is well known throughout this sphere, easily ascertained and its existence and universal or near universal application would be readily assented to by a person in this industry. It must be certain and applied uniformly.
In British Crane Hire Corporation Ltd v Ipswich Plant Hire Ltd [1974] 2 WLR 856, the defendant telephoned the plaintiff and hired a crane as a matter of urgency. Both were in the earth-moving business. No conditions of hire were discussed during the telephone conversation, except for the cost of hire and transport. The plaintiff subsequently sent a form to the defendant which set out the terms of hire. The defendant did not sign this document which provided that the defendant was liable for certain loss incurred in the event of damage to the crane. The crane sank into a marsh and the plaintiff sued for the cost of recovery pursuant to the terms of hire set out on the form sent to the defendant. The question arose as to whether the form constituted part of the contract. During the hearing, it was established that the defendant had hired equipment from the plaintiff on two prior occasions, these being some 10 months apart. On both of those occasions, the form in question was used. The defendant's manager also gave evidence that the form used by the plaintiff was quite similar to that put out by their trade association and was used by most contractors. The form had been used by the defendant itself. The court of Appeal held that a trade usage had been established and the contract between parties was subject to that usage.
