Breach of Contract Flashcards
Ways to discharge a contract
- Performance
- Breach
- Agreement
- Frustration / Mistake
What is a breach of contract
Breach is failure to perform obligation
Breach after / when performance is due
-> Condition, warranty, innominate term
Breach before performance is due (anticipatory)
Breach of condition
Condition is:
“stipulation which the parties have agreed either expressly or by necessary implication or which the general law regards as a condition which goes to the the root of the contract so that any breach of that term may at once and withouth futher reference to the facts an circumstances
Breach of a condition
“Relieves the party not in default of further performance of his obligations”
“Relieves the party not in default of further performance of his obligations”
-> Hong Kong Fir Shipping v Kawasaki Kisen Kaisha
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Where parties call term a condition courts may intervene if it is not a condition
Where parties call term a condition courts may intervene if it is not a condition
Schuler v Wickman Tools
Where parties are clear as to their intentions certainty prevails
Lombards North Central v Butterworth
where parties are clear as to their intention certainly prevails
Rule of clear intention applies where the breach seems immaterial
Union Eagle Ltd. v Golden Achievement Ltd
Rule of clear intention applies where the breach seems immaterial
Stipulate both that erm is of essence and that breach allows termination
Bunge Corporation v Tradax
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Note: This is the presumption where lawyers drafted contract
Schuler v Wickman Tools
Where parties are clear as to their intentions certainty prevails
Lombard North Central v Butterworth
Applies even where the breach seems immaterial
Applies even where the breach seems immaterial
Union Eagle Ltd. v Golden Achievement Ltd
Breach of warranty
- Is a minor term
- Not central to forming of or operation of a contract
- > Bettini v Gye
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Note role of legislation
-> Wallis, Sons & Wells v Pratt & Waynes
Breach of innominate term
Established in Hong Kong Fir Shipping
- Term “seaworthy” can be essentia or non-essential, depending on factual circumstance - not known at outset
- Hence it is neither condition nor warranty
- Diplock: “As my brethren have already pointed out, the shipowners´s undertaking to tender a seaworthy ship has, as a result of numerous decision as to what can amount to “unseaworthyness”, become one of the most complex of contractual undertakings. It embraces obligations with respect to every part of the hull and machinery, stores and equipment and the crew itself. It can be broken by presence of trivial defects easily and rapidly remidiable as well as by defects which must inevitable in a total loss of the vessel”
Breach of an innominate term
Considered in The Mihalis Angelos
-> Consequences of breach had been pre-determined
“Should the vessel not be ready to load (wether in berth or not) on or before July 20, 1965, charterers have the option of conceilling this contract, such option to be declared, it demanded, at least 48 hours before vessels expected arrival at part of loading”
- > “Effect test” only employed where categorisation is unclear
- > Highlighted certainty in contractual relations
- > Highlighted certainty in contractual relations
Breach of an innominate term
Bunge Corporation v Tradax
“The first question is always, therefore, wether, upon the true construction of a stipulation and the contract of which it is part, it is a condition, an innominate term, or only a warranty.
If the stipulation is one, whoch upon the true construction of the contract the parties have not made a condition and breach of whoch may be attended by trivial, minor or very grave consequences, it is innominate, and the court (or arbitrator) will, in the event of dispute, have the task of deciding wether the breach that has arisen is such as the parties would have said, had they been asked of the time they made their contract: “it goes without saying that, if that happens, the contract is at an end”
Anticipatory breach
- Breach of contract before performance is due
- Historically recognised
- > Hochster v De La Tour (1853)
“If it should be held that, upon a contract to do an act an a future day, a renunciation of the contract by one party dispenses with a condition to be performed in the meantime by the other, there seems no reason for requiring that other to wait until the day arrives before seeking his remedy by action: and the only ground on which the condition can be dispensed with seems to be, that the renunciation may be treated as a breach of the contract”
