Classification of Terms

Question 1

Hong Kong Fir Shipping Co. LTD. v Kawasaki Kisen, 1962
(Introduces Innominate Terms)

Answer 1

Created a third category of terms—innominate terms.
- The innominate term acts like a condition if the innocent party has been substantially deprived of the entire benefit of the contract in light of the breach.
- The innominate term acts like a warranty if the innocent party is not substantially deprived of the entire benefit of the contract.
Innominate terms are considered to be a third category of terms because sometimes we are “unsure/don’t know” if something is a condition or a warranty at the formation of the contract. Must ask at time of formation if an ORP would see that the intentions of the parties would have given any right to repudiate, if yes you have a condition, if no then you have a warranty.
- If the answer is idk, then you have an innominate term.
- Must then see if the breach goes to the entire point of the contract eviscerating it.
§ If yes, then the innominate term will then be labelled as a condition subject to repudiation.
If no, then the innominate term will be labelled as a warranty subject to damages only.

Question 2

Wickman Machine Tool Sales Ltd v L. Schuler A.G., 1974
(Expressed Term vs Intention)

Answer 2

The use of the word “condition” or “warranty” in the contract is a good indication of the intentions of the parties, however, it is not completely determinative. While explicitness is a good indication, it is not always sufficient.
The main question is not “what word did they use in either warranty or condition” but “how did they treat the term?” and “did the parties intend for a breach of this term give right to repudiate?”