Under what conditions will courts typically imply terms into a contract?

Courts typically imply terms into a contract when it is reasonable to do so, which involves evaluating the intentions of the parties and the context of the agreement. The principle behind this is to fill gaps in a contract and ensure that the agreement operates smoothly and fairly for both parties, reflecting what would be reasonably understood from the circumstances and the nature of the contract.

For example, if a contract leaves out an essential term that is necessary for its execution but does not fundamentally change the agreement, the court may imply a term that aligns with industry standards or common practices. This reinforces the idea that contracts should fulfill the parties' intentions and maintain fairness in their dealings.

The other options are not aligned with this principle. The implication of terms does not require mutual agreement of both parties at the time of contract formation, nor does it occur when it is unreasonable to do so. Courts do not follow a strict rule only allowing terms to be implied if they are explicitly included in the contract, as doing so would limit the capacity for contracts to be interpreted flexibly and fairly in light of the circumstances surrounding them.