Status of Terms

Question 1

What is a condition?

Answer 1

• A condition is an important part of a contract and goes to the heart of it.
• If a condition is breached then the contract is rendered meaningless and will thus end.
• The claimant will be allowed the fullest range of remedies- the ability to repudiate the contract and claim damages.
• CL: Poussard v Spiers and Pond- The lead singer’s performance was crucial to the production and was a condition. The producers were therefore entitled to repudiate and terminate her contract

Question 2

What is a Warranty?

Answer 2

• Minor terms of the contract, and the contract might be able to continue if they are breached
• Warranties are usually of ancillary/secondary purpose to the contract.
• Only remedy for breach of a warranty is in damages
• CL: Bettini v Gye- The requirement to attend rehearsals was only ancillary to the main purpose of the contract. The breach only entitled the producers to damages

Question 3

What is an innominate term?

Answer 3

• It does not naturally identify as a condition or a warranty
• The court will assess the impact of the breach of such a term to identify how it should be properly categorized.
• Only if the breach is sufficiently serious will the contract be repudiated.
• A problem is that they leave parties in a state of uncertainty as no one will know the consequence until there’s a breach and the judge has declared how serious it is.
• CL- The Hong Kong Fir Case- A warranty had been breached and not a condition. and therefore only damages were appropriate.
  Reardon Smith Line v Yngvar Hansen-Tangen- The description was not a condition but an innominate term. Since the party had not been substantially deprived of the whole benefit, they were only entitled to damages