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Good Faith and Fault in Contract Law$
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Jack Beatson and Daniel Friedman

Print publication date: 1997

Print ISBN-13: 9780198265788

Published to Oxford Scholarship Online: March 2012

DOI: 10.1093/acprof:oso/9780198265788.001.0001

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The Implied Terms of Contracts: Of ‘Default Rules’ and ‘Situation-Sense’ 1

The Implied Terms of Contracts: Of ‘Default Rules’ and ‘Situation-Sense’ 1

(p.191) 8 The Implied Terms of Contracts: Of ‘Default Rules’ and ‘Situation-Sense’1
Good Faith and Fault in Contract Law

Todd D Rakoff

Oxford University Press

This chapter addresses the question of how courts should deal with the process of gap filling by what are variously called ‘background terms’, ‘default rules’, or ‘implied terms’. The issue may arise in standard situations such as landlord and tenant, seller and buyer, or employer and employee, or in more individual or ‘one-off’ contracts in which there is a gap in the terms. The chapter is concerned with the first of these and discusses the difficulties and abstractness of a number of approaches, including ‘fairness’, ‘a common sense notion of implied consent’, a ‘hypothetical bargain’ test, and an efficient risk-allocation test. It proposes a ‘situation sense’ approach, which depends on a considerably more explicit, tight, and structured model of the transactional situation at issue in its societal context.

Keywords:   contract law, gap filling, background terms, default rules, fairness, implied consent

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