Implied terms, though not explicitly stated, can significantly alter an original agreement by filling in gaps and clarifying ambiguities. They are legally binding and can be introduced by law or custom, potentially changing the original parties' intended obligations.

Extent to Which Implied Terms Can Alter the Original Agreement Between Parties
Implied terms play a significant role in contract law by filling gaps in agreements where the parties’ intentions are not explicitly stated. However, their ability to alter the original agreement is limited by certain legal principles. Below is an analysis of how implied terms operate under Indian Contract Law and their boundaries:

1. Types of Implied Terms
Implied terms can arise from:

(A) Terms Implied by Law (Default Rules)
Automatically included by statute or common law, unless expressly excluded.

E.g., Sale of Goods Act, 1930:

Section 16: Implied condition of merchantable quality.

Section 14(b): Implied warranty of fitness for purpose.

(B) Terms Implied by Fact (Based on Parties’ Presumed Intentions)
Courts imply terms to reflect the parties’ unstated but obvious intentions.

Test for Implication (BP Refinery v Shire of Hastings, 1977):

The term must be reasonable and equitable.

It must be necessary for business efficacy (i.e., without it, the contract would be unworkable).

It must be so obvious that it "goes without saying."

It must be capable of clear expression.

(C) Terms Implied by Custom or Trade Usage
Industry practices may be read into contracts if:

The custom is well-established, notorious, and reasonable.

Both parties knew or should have known of it.

2. Extent to Which Implied Terms Can Modify the Original Agreement
(A) Cannot Contradict Express Terms
Primary Rule: An implied term cannot override an express term (Mohanlal v Sriram, 1973).

Example: If a contract states "no warranties apply," an implied warranty of fitness cannot be enforced.

(B) Can Supplement Missing Terms
Implied terms fill gaps where the contract is silent.

E.g., Employment Contracts:

Duty of mutual trust and confidence is implied unless excluded.

(C) Can Modify the Contract If Express Terms Are Ambiguous
Courts may use implied terms to interpret vague clauses (Adani Gas v GAIL, 2020).

(D) Can Be Excluded by Clear Agreement
Parties can exclude implied terms through explicit wording (e.g., "This agreement supersedes all implied terms").

3. Judicial Approach in India
(A) Restraint on Judicial Overreach
Courts avoid rewriting contracts and imply terms only when strictly necessary (Satyabrata Ghose v Mugneeram Bangur, 1954).

(B) Case Examples
Lalman Shukla v Gauri Dutt (1913)

A reward offer was impliedly accepted by performance (finding a missing boy).

U.P. Rajkiya Nirman Nigam v Indure Pvt. Ltd. (1996, SC)

An implied duty of timely payment was read into a construction contract.