Classification of Terms by Tisean Smith

What is a condition? A condition is a major term which goes to the root and heart of the contract. A condition is also a traditional type of term.

What is a warranty? A minor term of the contract.

What is an innominate term? An innominate term looks at qualitative terms not quantitative. It is a 'wait and see' approach.

Hong Kong Fir Shipping v Kawasaki Kaisha Ltd 1962

This case introduced the concept of an innominate term.

A ship was leased by the defendants (D's), in the lease there was a term that the plaintiffs should provide a ship which was 'in every way fitted for ordinary cargo service'. The ship was in a poor state of repair, the plaintiff's also admitted the ship was unseaworthy and as a result the D's sought to terminate the contract for a breach of condition. The plaintiffs succeeded against the D's wrongful termination of the contract.

The COA decided that the seaworthiness of the ship was not a condition as the problems that had occurred were not so great to frustrate the commercial purpose of the hire. However, termination of the contract would been fine if the ship could not sail.

'Seaworthiness' was regarded as an innominate term as it could've been breached by something big or small. Whether a term will be regarded as an innominate term depends on the nature and effects of a particular breach.


Created with images by edar - "business signature contract" • Peter Kaminski - "Roots" • foundin_a_attic - "img435"

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