Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Ltd [1962] 1 All ER 474 CA

The claimant leased a ship for 2 years to the defendant. The ship was delivered in February 1967 and sailed to the US and then to Japan on the same day. However, the vessel was old and the machinery needed to be maintained by experienced and competent mechanics which the defendant didn't have due to insufficient staff and the fact that their head mechanic was an alcoholic and was frequently drunk on duty. Due to this, the ship suffered many serious breakdowns and was out of commission for a total of 20 weeks. The contract has a clause specifying the seaworthiness of the vessel and so the claimants tried to sue for breach of contract and wanted to end the contract. The Court of Appeal ruled that they couldn't end the contract as the clause wasn't a condition, but an innominate term because it could be breached by something small or large.

Condition -a condition is a major term of a contract, associated with the root and heart of the contract. If a condition is breached, the party is entitled to claim for damages or to repudiate the contract. However, the party can choose to affirm the contract and continue with it if they wish.

Warranty - a warranty is a minor term and is subsidiary to the main contract. If breached, the party can only claim for damages but can't terminate the contract. However, in insurance contracts, a warranty is a major term.

Innominate term - these were invented for when the nature of a term is unclear and so the court is uncertain of the type of breach committed. It relates to the 'wait-and-see' approach which means that it doesn't depend on the terms breached but the overall effect it has. This is because it isn't possible to state the outcome with certainty when the breach first occurs. A breach of one of these terms can have both remedies; damages or termination of the contract.

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