Conditions, Warranties And Innominate Terms (Terms Of Contract) BY OSAREMEN ODION IBADIN. SEMINAR(TUESDAY 9AM-10AM

BRIEF INTRODUCTION

The terms of contract have different weighting and different significance to the contract. if the term are of different significance then the consequence of the breach will vary with their significance and necessity and thereby eligible for different remedies. The court have distinguished between terms and determine their classification in two ways:

  1. The terms according to the importance attached to the completion of the contract.
  2. The term according to the remedies to available to a party if they fail to honor the obligation.

As a result of these classification, the court divided the terms perviously to two. Conditions and Warranties. the newly added term is known as Innominate Terms.

terms of contract.

CONDITIONS

A conditions a term of contract which is important to the contract that failure to perform the condition would render the contract meaningless and the purpose of the contract will be destroyed. Therefore anything that is accepted as being a condition is said to "go to the root" of contract. As a result of the significance of the term to the contract, the court allows the claimant who is a victim of the breach of term the highest range of remedy available. The court would grant the claimant to lawfully repudiate his obligations and sue for damages. Repudiation as a remedy is the right of the victim who has suffered breach to consider the contract ended as a result of the other party's breach of contract. In the case of Poussard v Spiers and Pond(1876) 1 QBD 410 the Court held that she had breached the contract by turning up after the first night. As the lead singer, her presence was crucial to the production and the condition entitling the producers to repudiate and terminate her contract for not attending at the early performances.

WARRANTIES

Warranties are regarded as minor terms of the contract. Warranties are a residual category of terms dealing with obligation that are secondary to the major purpose of the contract. As a result the remedy for a breach of warranty is merely an action for damage. There is no right to repudiate for a breach of warranty. if the claimant tries to repudiate, the court would view it as unlawful. In Bettini v Gye (1876) 1 QBD 183 the Court held that the breach only entitled to the producer is to sue for damages and not to end the contract and replace the singer as they had done. The Sale of Good Act 1979 specifies whether its implied are conditions or warranty. A good example is insurance which is viewed as a warranty but its term is a condition.

A diagram of how innominate term operate.

INNOMINATE TERMS

The problem of determining which category a term fit is usually occurs when the parties have been silent on the subject matter or where the contract has being oral. During the twentieth century the court developed an approach which they describe the term as "innominate." This means they did not classify the term but when it comes to determining the realist of breach, they will consider the consequence of the breach rather than on any prior classification. Although, if innominate terms were developed by the judges to ensure fair remedy on both sides, should there still be need for conditions and warranty to still be part of term?, why not use innominate terms to remedy all cases that has to do with the breach of contract?.

SUMMARY OF THE TERMS OF CONTRACT

The diagram above represent the summary of the classification of terms.

Hong Kong Fir Sipping Co Ltd v Kawasaki Kisen Kaisha Ltd (The Hong Kong Fir Case) [1962] 2 QB 26

The defendant chattered a ship from the claimant under two-year charter party. a term in contract that required the ship to be in a very good for cargo service. The ship broke down as a result of incompetence of the engine room staff and in any case was in a general poor state of repair and not seaworthy, a fact admitted by the claimant . As a result, 18 weeks used on the ship was lost by the defendant and they claimed to treat the contract as repudiated and at the end. The claimant sued, claiming that the term was only warranty, only enticing the defendant to sue for damages. the Court of Appel agreed. Lord Diplock stated in the judgement that " ...unless expressly provided for in the contract, depends on the nature of the event to which the breach gives rise and do not follow automatically from a prior classification... as a condition or a warranty". the process seems simple enough. Remedies are determined based on the consequences of the breach. Only a breach that is sufficiently serious would enable the contract to repudiated by the victim of the breach. Nevertheless, the clear difficulty with identifying terms as innominate is it can lead to a state of uncertainty between contractual parties. No one can actually determine the outcome of the breach, its left for the judge to decide. The principle has also being applied to different cases such as Cehave NV Bremer Handelsegesselschart mbH (The Hansa Nord) [1976] QB 44. However the court can still classify it as a condition regardless of what consequences of the breach might be, where it feel that the circumstances of the context in which the breach occurs demand it Bunge Corporation[1981] 1 WLR 711.

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