Classification of terms Contract law

Condition - fundamental term of the contract. It is a clause in a contract or agreement which has for its object to suspend, rescind or modify the principal obligation. In case of a will, to suspend, revoke or modify the devise or bequest.

Where a condition is breached, the claimant may sue for damage, terminate the contract, or take both of this options. -> Poussard v Spiers & Pond (1876)

Warranty - A minor term of the contract. in contract law, a warranty has various meanings but generally means a guarantee or promise which provides assurance by one party to the other party that specific facts or conditions are true or will happen.

Where a breach of warranty occurs there is no right to terminate the contract. The claimant may sue for damages only. -> Bettini v Gye (1876)

innominate Term refers to a contract which is not classifiable under any particular name. This is intermediate term which cannot be defined as either a "condition" or a "warrant".

The courts will look at the consequence of the breach in deciding what the remedy is appropriate -> Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (1962)

Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 W.L.R 474

Case comment

In 1957 a charter-party hired a ship for 24 months. Owner duties were to fully maintain hull and machinery during service. In February 1957, that ship had been delivered to charter-party in reasonably good condition. However, during first voyage – were a serious breakdown mainly caused by an inadequate engine-room staff. This serious breakdown caused a delay and expenses on repairs. Before September 1957, charterers have made decision to repudiate the contract. They had no reasonable grounds to think that the vessel could be made seaworthy. One of the terms effectively required the ship to be seaworthy.

In fact, the ship before September 1957 was made thoroughly seaworthy. Owners made decision to sue charters for wrongful repudiation.

The trial judge held in favour of the owners. The charters appealed.

Held: The Court of Appeal agreed with the trial judge that the breach did not go to the root of contract. The charters had not been deprived of substantially the whole benefit of the contract and did not have the right to terminate the contract.

Sources and bibliography:

  • Contract Law, J. Poole, Oxford 2016
  • Contract Law, Mindy Chen-Wishart, Oxford 2015
  • The modern law of contract, R Stone, J. Devenney Routledge 2015

Made with Adobe Slate

Make your words and images move.

Get Slate

Report Abuse

If you feel that this video content violates the Adobe Terms of Use, you may report this content by filling out this quick form.

To report a Copyright Violation, please follow Section 17 in the Terms of Use.