A condition is a major term of the contract, which goes to the root of the contract.
If a party breaches a condition the consequences are very serious. The innocent party may choose to either:
- Terminate the contract and sue for damages;
- Affirm the contract (i.e. the innocent party continues to perform its contractual obligations), sue for damages and pursue other remedies like injunctions or specific performance.
Poussard v Spiers  1 QBD 410 - Madame Poussard entered a contract to perform as an opera singer for 3 months. Due to ilness, she couldn't perform the 4 first nights, which lead to the producers to look for a substitute, therefore terminating the contract. The artist sued for breach of contract and lost the case. it was held that the first few nights are the most important, her absence amounted to a breach of condition.
Calling a term a 'condition' does not necessarily make it one
Warranties are minor terms of a contract, they are ancilliary terms to the main purpose of the contract.
If a warranty is breached the innocent party can claim for damages only, however the party can never end the contract.
bettini v gye (1876) 1 qbd 183 - Bettini agreed by contract to perform as an opera singer for a whole season. He became ill and missed a couple of days of rehearsals. The producers viewed this term as a condition and decided to terminat his contract. The singer sued and was successful. It was held that the terms regarding the rehearsals are merly ancilliary to the main part of the contract, therefore it only amounted to a warranty.
The concept of innominate term (or 'intermediate' term) first arose in the case of Hong Kong Fir Shipping Co. Ltd v Kawasaki Kisen Kaisha Ltd.
Hong kong Fir Shipping Co. Ltd v Kawasaki Kisen Kaisha Ltd  1 All er 474 - A ship was chartered to the defendants for a 2 years. The agreement included a term that the ship was 'in every way fitted for the ordinary cargo service'. Several problems arose with the engine of the ship and the engine crew was incompetent. Consequently the ship was out of service for 20 weeks and The defendants treated this as a breach of condition and ended the contract. The claimants brought an action for wrongful repudiation arguing the term relating to seaworthiness was not a condition of the contract.
This classification will appear if it is not possible to outset, with absolute certainty, the consequences of a particular breach of that term.
The innominate term approach looks to the effect of the breach and questions:
"Has the innocent party been deprived substantially of what t was intended that he should receive under the contract?" - Hong kong fir question
- Flexibility to the courts;
- Upsets the traditional classification: conditions and warranties;
- Operates on a 'wait & see' approach - the remedy depends on the effects of the breach and not on the status of the term.
Case commentary: Hong kong Fir Shipping Co. ltd v kawasaki kisen kaisha ltd  1 all er 474
Lord Diplock judgement was of extreme importance and influence, as it was the first to introduce the concept of 'innominate term'. He stated that the problem of the case was "(...) neither solved nor soluble by debating whether the shipowner's express or implied undertaking to tender a seaworthy ship is a 'condition' or a 'warranty'...". He gave special attention to the fact that there are numerous contractual agreements which cannot be categorised under the traditional classification of terms. It mainly depends on the 'nature of the event' to which the breach gives rise.
This case gave the courts the ability to be more flexible towards the traditional classification of terms. Courts can now decide the impact of the breach by looking at the consequences of the breach, rather than the status of the term broken.
If the effects of the breach are very serious, the courts will view it as acting like a condition.
If the effects of the breach are minor, it acts like a warranty.
If it's not possible to determine the impact of the breach, then it is viewed as an innominate term.