Classification of Terms By Luke Telling

Conditions

  • High importance term
  • If breached, it gives the right for the claimant to terminate the contract or be rewarded damages
  • If the parties label a term as a condition, then the court will often uphold this

Poussard v Spiers [1876] 1 QBD 410

An actress fell ill and couldn't perform the opening night of the performance she worked in. She was replaced by her understudy. She then sued for breach of contract, however her case was lost due to the opening night, being an essential part of a live performance, her performing on that night was a condition of getting employed in the role.

Warrenties

  • An assurance or gaurentee
  • A term that carries lesser importance to the contract than a condition
  • The Sale of Goods Act 1979 specifies whether implied terms are conditions or warrenties

Bettini v Gye [1876] 1 QBD 183

An actor turned up 3 days late to preliminary rehearsals. His contract was then terminated. He sued and won his case due to the late arrival being a minor term, a warranty. Comparing this to Poussard v Spiers, a very similar case, the distinction between conditions and warranties are clearly laid out due to the importance the terms hold in the contract.

Innominate Terms

  • Innominate terms are also known as intermediate terms
  • They adopt a wait and see approach
  • It gives courts flexibility to decide on the seriousness of the effect to pass fair judgement
  • Remedies of the breach depend on the effect of the breach, serious effects act like conditions and less serious ones act as a warranty.

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

A ship was rented to the defendants for a 2 year period. The agreement included a term that the ship would be seaworthy throughout the period of hire. The problems developed with the engine of the ship and the engine crew were incompetent. Consequently the ship was out of service for 20 weeks all together. 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. The defendants were liable for wrongful repudiation. The court created the innominate term. The court should look to the effect of the breach and ask if the breach has substantially deprived the innocent party of the whole benefit of the contract. 20 weeks out of a 2 year contract period did not substantially deprive the defendants of whole benefit and therefore they were not entitled to repudiate the contract.

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