Equitable Life Assurance Society v Hyman [2000] UKHL 39 is an English contract law case, concerning implied terms.

If policy holders took benefits as a taxable annuity (i.e. with a payment annually), then they got tax exemptions on the premiums (and bonuses at the end of the year).

Such standardised implied terms operate as general default rules: see Scally v Southern Health and Social Services Board [1992] 1 AC 294.

In Luxor (Eastbourne) Ltd v Cooper [1941] AC 108, 137 Lord Wright explained this distinction as follows: "The expression 'implied term' is used in different senses.

The process "is one of construction of the agreement as a whole in its commercial setting": Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1997] AC 191, 212E, per Lord Hoffmann.

This is how I must approach the question whether a term is to be implied into article 65(1) which precludes the directors from adopting a principle which has the effect of overriding or undermining the GARs.

The enquiry is entirely constructional in nature: proceeding from the express terms of article 65, viewed against its objective setting, the question is whether the implication is strictly necessary.

It cannot be seriously doubted that the provision for guaranteed annuity rates was a good selling point in the marketing by the Society of the GAR policies.

These are the circumstances in which the directors of the Society resolved upon a differential policy which was designed to deprive the relevant guarantees of any substantial value.

In substantial agreement with Lord Woolf MR I would hold that the directors were not entitled to adopt a principle of making the final bonuses of GAR policyholders dependent on how they exercised their rights under the policy.

In adopting the principle of a differential policy in respect of GAR policyholders the directors acted in breach of article 65(1).Lord Cooke added that the discretion could be struck down, no matter how broadly it was drafted, in the same way as happens in administrative law (Padfield v Minister of Agriculture) and private law (Howard Smith Ltd v Ampol Ltd).

Equitable Life almost collapsed after the case, because it was unable to meet its additional liability to GAR policyholders, and had to sell assets and close to new business.