Contract Law - Part 2 - Types of term

Question 1

What are the 3 term categories ?

Answer 1

1. Condition
2. Warranty
3. Innominate term

Question 2

What is a condition ?

Answer 2

A condition is a term in a contract that is so important, that failure to perform the obligation would destroy the main purpose of the contract

Question 3

What was the POL in the case of Poussard v Spiers

Answer 3

POL - As the lead her presence at the performance was the central part of her contract therefore a condition, so the contract can be repudiated

Question 4

(The term will always be a condition if it is to maintain certainty in commercial contracts, even if it doesn’t cause the other party a loss)
What was the POL in the case Mihalis Angelos case ?

Answer 4

POL - The expected ready to load clause was a condition despite the fact it had caused no loss to D, as there is need for commercial certainty in shipping contracts

Question 5

What is a warranty ?

Answer 5

A warranty is a minor term of the contract. Only damages can be claimed for a breach of warranty - the contract is not ended and the main purpose of the contract can continue despite breach

Question 6

(Breach of a warranty does not allow the injured party to repudiate the contract)
What was the POL in the case of Bettini v Gye

Answer 6

POL - Obligation to attend rehearsal wasn’t central to his contract, breach of warranty rather than condition therefore organisers couldn’t repudiate his contract

Question 7

What is an innominate term ?

Answer 7

An innominate term is a term in a contract that is not clearly a condition or warranty, whether it is either depends on the consequences of any breach of the term

Question 8

What was the POL in the case of Hong Kong Fir shipping v Kawasaki

Answer 8

POL - Court held that not all terms can be divided into conditions or warranties
Ask ‘ Was the D’s deprived of the whole benefit of the contract? ‘

Question 9

(Even where the parties have themselves classified the term as a condition the courts can hold that it was only a minor term and therefore a breach of that term would not give rise to right to repudiate)

What was the POL in the case of Schuler v Wickman

Answer 9

POL - Despite the fact contract stated the term was a condition, HOL held that it was warranty as it was a breach but not so big that manufacturer could completely back out of contract