Lancaster University. Shirlaw v Southern Foundries  2 KB 206 Court of Appeal The claimant had been employed as a managing director of Southern Foundries the office of employment was to last for 10 years. (affirmed sub nom Southern Foundries (1926) Ltd. v Shirlaw  A.C. 701). Module. Shirlaw v Southern Foundries Ltd  2 KB 206 This case considered the issue of implied terms and whether or not it was implied into an agreement for the engagement of a management director that he would not be removed as a director during the term of engagement. Appeal from – Shirlaw v Southern Foundries (1926) Ltd CA ( 2 KB 206,  AC 701,  2 All ER 445) The court warned against the over-ready application of any principle to justify the implication of terms into a contract. They amended the constitution to allow for the removal of Shirlaw from his post. facts shirlaw was appointed managing director of southern foundries (sf) for fixed term of ten years. 206 (17 March 1939), PrimarySources View on Westlaw or start a FREE TRIAL today, Southern Foundries (1926) Ltd v Shirlaw  2 K.B. If one of the parties would not have agreed to the term Test – whether parties would definitely not maybe have included the term 2. '” sf was taken over by another company who altered the pre-Sign in Register; Hide. See generally Phang, A., “ The Challenge of Principled Gap-Filling: A Study of Implied Terms in a … that the company would not so alter their articles as to put it in the power of themselves or any one else to determine the contract. In Shirlaw v Southern Foundries  his Lordship Justice Mackinnon introduced the officious bystander test which he said if followed by a judge in determining whether a term should be implied into a contract he could not be held to be wrong . Shirlaw v southern foundaries. Southern Foundries (1926) Ltd v Shirlaw  AC 701 is an important English contract law and company law case. (C.A.) case summary . Goddard L.J. University. Shirlaw v. Southern Foundries (1926) UK – if an officious bystander was to suggest an express provision, both parties would comment “Oh, of course!” Officious bystander test not satisfied in 4 circumstances: 1. 206, 227, per Mackinnon L.J. Federated Foundries then purchased a controlling share in the company and altered the company's Articles of Association giving them the power to remove directors. 48 Shirlaw v Southern Foundries (1926) Ltd.  2 K.B. Shirlaw v Southern Foundries (1926)Ltd  implied terms this was a contractual dispute which arose when a takeover was made of Southern Foundries. SHIRLAW v. SOUTHERN FOUNDRIES (1926), LD. Shirlaw v Southern Foundries  The officious bystander test: “If, while the parties were making their bargain, an officious bystander were to suggest some express provision for it in their agreement, they would testily suppress him with a common ‘Oh, of course!