Terms

Question 0

Schuler AG v Wickman Machine Tool Sales Ltd (1974)

Answer 0

W were exclusive selling agents in UK, there was a clause that provided that either party might terminate the contract if other committed a ‘material breach of obligation’.
House of Lords held that S was not entitled to terminate the contract.
Courts are seeking to discover intention as disclosed by contract as a whole.
- the fact that a particular consideration leads to a very unreasonable result must be a relevant consideration.

Question 1

Three classifications of terms and their remedies

Answer 1

Warranty - less important part of contract. Remedy for breach = damages.

Conditions - more important part of the contract.
Wronged party has an election of remedies BUT once election has been made the choice is binding
* To terminate the contract and use for damages (if necessary) OR
*Accept the breach and sue only for damages while providing and hoping to receive contained performance of contract.

Question 2

Sale of Goods Act 1979

Answer 2

Warranty is defined as being ‘collateral to the main purpose of the contract’.
Collateral seems to have a sense of secondary or inessential.

Question 3

Hong Kong Fir Shipping v Kawasaki Kisen Kaisha (1962)

Wait and see approach

Answer 3

Diplock and innominate terms approach.
Rather than seeking to classify the term itself as a condition or warranty, the court should look to the effect of the breach and ask if the breach has substantially deprived the innocent party of the whole benefit of the contract. -only when this answered in the affirmative is there breach of condition.

Question 4

Professor Brownsword 6 broad reasons as to why contract may be elected to be terminated.

Answer 4

1) Contract breaker breach is intentional, fraud, dishonest.
2) Breach raises concerns about competence of contract breaker.
3) Breach renders performance under contract radically different from that envisaged at formation.
4) Proving and quantifying losses flowing from the breach gives rises to difficulties which put innocent party at risk.
5) Breach gives rise to concerns about contract breakers ability to meet future claims.
6) Breach gives rise to concern about innocent party’s own ability to perform either the contract in question or another associated contract.

Question 5

Bunge Corporation v Tradex Export SA (1981)

Answer 5

House of Lords held that the breach was of a condition because of the need for certainty in commercial contracts.
-Where a term is previously unclassified, the default position is to treat it as an innominate term, unless this is contradicted.

Question 6

Sale of Goods Act 1979: S2

Answer 6

Contract of sale of goods- the price is the consideration that passes from the buyer to the seller.

Question 7

Sale of Goods Act 1979 S15

Moore v Laundauer 1921

Answer 7

Introduced by Sale and Supply of Goods Act 1994

Puts an end to the practice of wronged party who have suffered no damage as a result of breach of condition to escape a bad bargain.
-Only occurs in non-consumer cases, but has a similar effect to the elasticity of the innominate terms analysis in broader commercial law.

Question 8

Supply of Goods and Services Act 1982: S13-15

Answer 8

Takes the structure and content of the main run of implied terms in 1979 Act and applies with virtually no modifications to contracts for the transfer of property in goods and contracts for the hire of goods.

S13-14 probable that they are innominate terms.
S15- introduces a mechanism into contracts which would not give rise to the sequence of breach and remedy, and does not require further definition.