Conditions, Warranties, Innominate Terms Case Commentary on Hong Kong Fir Shipping v Kawasaki Kisen Ltd [1962]

CONDITIONS

What is a condition?

The conditions in a term of a contract are considered a major term and essential term, which goes to the root or the heart of the contract.

Remedies for Breach of a Condition

The parties have the right to claim damages and terminate contract

WARRANTIES

What is a warranty?

A warranty is considered as minor terms or subsidiary terms. The warranty term describes a contractual term but if breached it would lead to non serious consequences.

Remedies for Breach of a Warranty

Breaches of a warranty will result in only the action of damages the contract will still exist. The only exemption to this rule would be for insurance contracts.

INNOMINATE TERMS

What is a Innominate Term?

An innominate term is considered an intermediate term. This is also known as the wait and see approach, where the courts will wait till there is a breach then see what consequences needs to be undertaken.

Remedies for an Innominate Terms

The consequences for a breach of an innominate term can be trivial or very serious. If the effects of the breach are serious the courts will view it like a condition in that particular situation and if the effects of the breach are minor it acts like a warranty. When determining if the innominate term should be treated as a condition or warranty, it first needs to be considered how serious the breach is and thus will tell you if the term is acting as a condition or warranty.

CASE COMMENTARY

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

Introduces Innominate Terms

The Court of Appeal refused to describe the ship obligation for sea worthy vessel as a character of a condition. The sea worthiness condition was not enforceable because the repairs for the ship did not frustrate the commercial of the cargo. If the ship never went anywhere or made any deliveries then the contract could be terminated.

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