Liverpool City Council v Irwin
House of Lords
Citations:  AC 239;  2 WLR 562;  2 All ER 39; (1984) 13 HLR 38; (1976) 32 P & CR 43; (1976) 238 EG 879;  JPL 427.
Tenants of council flats withheld their rent to protest the conditions in their properties, particularly the poorly maintained common areas. These areas had been subject to routine vandalism, despite the council’s efforts to stop this.
The parties did not have a formal written contract, only a document entitled ‘conditions of tenancy’. This included a form, signed by the tenants but not the council, stating acceptance of the tenants’ obligations but not describing the council’s obligations as landlord.
The council sued for possession of the flats, based on the failure to pay rent. The tenants countersued for breach of the repair, maintenance and quiet enjoyment covenants. They argued that these covenants and duties were implied into the contract, since there was no formal inclusion of these terms.
- Did the contract contain the implied terms contended for by the tenants?
The House of Lords held that:
- The form signed by the tenants was completely unilateral, and so could not represent the complete contract. The court therefore had to determine what the remainder of the contract was.
- The nature of a residential lease contract was such that it was necessary to imply the covenants and duties the tenants contended for. In particular, it was necessary to imply repair and maintenance clauses in relation to common areas and means of access where the landlord retains occupation of these areas.
- These terms were to be implied into this kind of contract as a matter of law. It applied to both private and council lettings.
- The standard of care under these clauses was what a reasonable tenant would do for themselves. The tenants had failed to show that the council was negligent, so the council was not in breach of the implied terms.
This Case is Authority For…
There are two ways in which the courts can imply a term into a contract: in fact and in law. When the courts seek to imply a term in law, they are not seeking to decipher the parties’ objective intentions. They are seeking to determine what is a necessary clause for a particular class of contract.
The House of Lords stressed that the power to imply terms in law does not allow the courts to imply any term they think reasonable. The conditions for implication in law must be met. Additionally, Lord Cross noted that it is open to the parties to exclude a term implied by law.