Types Of Terms Flashcards
What are the terms of a contract?
The terms of a contract are what the parties to the contract have agreed. These terms can either be specifically agreed (express terms) or implied.
What are the two approaches to classification of terms?
The two approaches are term based and breach based.
What does term based classification mean?
Term based classification categorizes a term as either a condition or warranty.
What is a condition in a contract?
A condition is a central term of the contract that is so important that a failure to perform it would destroy the purpose of the contract.
What happens when a condition is breached?
When a condition is breached, the victim may repudiate the contract and sue for damages.
Example case: Poussard v Spiers.
How can conditions be defined?
Conditions can be defined by the parties, identified due to customary trade usage, or implied by statute.
What is a warranty in a contract?
A warranty is a minor term of the contract where failure to perform it does not destroy the whole contract.
What happens when a warranty is breached?
When a warranty is breached, the contract can continue to be performed, and the victim cannot repudiate the contract but can sue for damages.
Example case: Bettini v Gye.
What is an innominate term?
An innominate term is a term in a contract that is not clearly a condition or a warranty.
What happens when an innominate term is breached?
When an innominate term is breached, the victim may repudiate the contract and/or sue for damages depending on the effect of the breach.
What determines if an innominate term is treated as a condition or warranty?
If the breach deprives the claimant of the whole benefit of the contract, it will be treated as a condition; if some benefit remains, it will be treated as a warranty.
What are expected readiness clauses classified as?
Expected readiness clauses are classed as conditions in the interests of ensuring commercial certainty.
Example case: Mihalis Angelos.
