A third classification has emerged, known as an innominate term, which can range from trivial to very serious. This term is known as the 'wait and see' approach to contracts as it may not be obvious what classification a term falls under. For example, this can arise from the vagueness of certain terms.
As a result, innominate terms add a degree of flexibility to the courts, which helps to protect vulnerable and unequal parties. However, this does mean that the parties have no certainty in their rights in the case of a breach.
If the effects of the breach are serious, the courts view it as acting like a condition in that particular situation. On the other hand, if the effects of the breach are minor, the courts view it as acting like a warranty. However, this does not mean parties are automatically entitled to certain remedies for these breaches.
Important case example: Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Ltd  (This case introduced the concept of innominate terms.)
The company rented a ship for two years. They then proceeded to sail their cargo in it from the United States to Japan. It was an old ship which meant that it's machinery needed to be maintained by experienced and capable staff in the engine room. However, there was an insufficient number of staff and a drunk chief engineer. This resulted in a multitude of serious breakdowns, adding twenty weeks to their shipping time. The company attempted to sue for breach of a condition, however, the court ruled that seaworthiness was not a condition of their contract. They made this ruling as, despite the number of breakdowns, none of that was so great to break the commercial purpose of the charter. The important question to ask when deciding the remedy for an innominate term is: was the party deprived of the whole benefit of the contract? In this case, the answer was no.
You can test a breach of an innominate term for its remedy using these steps:
- Look at the consequences of the breach of the term.
- Make an assessment of the seriousness of the breach.
- Come to a decision as to whether the term is acting as more of a condition or a warranty.