Term
| What are the three types of terms? |
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Definition
Conditions
Warranties
Innominate terms (Hong Kong Fir) |
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Term
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Definition
Conditions are the ultimate term - the term that everyone wants.
A condition is an important term which goes to the root of the contract |
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Term
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Definition
| Warranties are less important than conditions. A warrenty is a less important term, which does not go to the root of the contract. |
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Term
| Why is it important to distinguish whether a term is a condition or a warranty? |
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Definition
| Because breach of a condition provides a much better remedy. |
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Term
| What is an innominate term? |
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Definition
| The idea of innominate terms was introduced in Hong Kong Fir. In this case it was decided that not all terms are readily/sensibly identified as being either a condition or warranty. Therefore, it makes more sense with these type of ambiquous terms to look at the effect that breaching them has had & then decide whether a condition remedy is due, or a warranty remedy is due. |
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Term
| What are the two available remedies for breach of a condition? |
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Definition
The innocent party can either
a) Affirm and continue the contract AND claim damages for the loss occasioned by the breach (affirmation = the innocent party carrying out their side of the contract)
b) Terminate and claim damages immediately |
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Term
| What is the only available remedy for breach of a warranty? |
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Definition
| The innocent party can claim damages THEY CAN NOT TERMINATE |
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Term
| Which two cases can be used to explore the distinction between conditions and warranties? |
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Definition
Poussard v Spiers [1876]
Bettini v Gye [1876] |
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Term
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Definition
A CONDITION GOES TO THE ROOT OF A CONTRACT
C = operah singer who was hired to turn up to rehearsals, turn up for the opening night, and perform in the rest of the shows
C was ill, and failed to turn up for any rehearsals, missed the opening night, and missed the first week's worth of shows
HELD - the C turning up the first night was a condition of the contract, because it went to the root of the contract / it went to the root of the matter... it was the defining purpose of the contract - |
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Term
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Definition
BREACH OF A CONDITION CAUSES A THING WHOLLY DIFFERENT IN SUBSTANCE TO WHAT WAS AGREED. BREACH OF A WARRANTY CAUSES A MERE VARIATION OF WHAT WAS AGREED.
C = operah singer who was contracted to turn up to rehearsals, and the opening night, and the rest of the performances
C was ill and missed most of the rehearsals
However, C managed to go to the last two rehearsals
C was also there for the first night, and was there for the rest of the rehersals
HELD - being present for all of the rehersals was a warranty, NOT a condition. |
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Term
| If, by breaching a term of a contract, you cause the contract to be something wholly different than what was agreed upon. What have you breached? |
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Definition
| A condition - you have breached somethng which goes to the root of the contract |
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Term
| If, by breaching a term in a contract, you case performance of the contract to be slightly varied from what was agreed upon. What have you breached? |
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Definition
| A warranty - the term you breached does not go to the root of the contract |
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Term
| What are the two types of condition? |
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Definition
a) Promissery conditions
b) Contingent conditions |
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Term
| On this course, what type of conditions are we most interested in? |
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Definition
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Term
| What are promissery conditions? |
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Definition
| Contractual promises / undertakings that something will happen |
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Term
| What are contingent conditions? |
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Definition
| Conditions upon which the contract depends (something which has to happen before the contract starts, or something which if it happens, will terminate the contract. |
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Term
| What are the two type of contingent conditions? |
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Definition
a) Conditions precedent
b) Conditions subsequent |
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Term
| What is a condition precedent? |
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Definition
| Conditions which have to exist before the contract comes in to effect. If that state of affairs never arises, the contract never comes in to action. |
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Term
| What is a condition subsequent? |
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Definition
| If a certain state of affairs comes into place, the contract will be terminated (e.g. if a civil war breaks out) |
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Term
| What are the three ways in which something can be classified as a condition? |
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Definition
a) By statute (e.g. s.12-15 Sale of Goods Act)
b) Parties intentions (e.g. if they define it as a condition - however doesn't = conclusive)
c)By the judiciary (e.g. Poussard v Spiers [1876]) |
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Term
| Which section of the Sale of Goods Act will ALWAYS be a condition? |
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Definition
| S12 - IT WILL NEVER BE ACCEPTABLE TO SELL SOMETHING WHICH YOU DON'T OWN. |
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Term
| What is the deal with ss13, 14 & 15? |
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Definition
| ss13(1a), 14(6) & 15(3) = the requirements within the sections are implied terms... HOWEVER, s15(a) = if the buyer doesn't deal as a consumer... 'such slight breaches of s13, 14 or 15 so that rejection of goods would be unreasonable, breach may be treated as a warranty rather than a condition' |
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Term
| What effect does s15(a) Sale of Goods Act 1979 have on the requirements contained in ss13, 14 & 15(3)? |
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Definition
| S15a = if the buyer is not acting as a consumer (e.g. they are a business & therefore = B2B)... then if the breach (of s13, 14 or 15) is so slight that it would be unreasonable to reject it, the breach MAY be treated as a breach of a warranty rather than a breach of a condition. |
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Term
| If a party breaches ss 13, 14 or 15 SGA 1979, will it always be treated as a breach of condition? |
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Definition
NO - s15A
If the buyer is acting as a consumer = YES breach is treated as breach of condition.
However, if the buyer is acting as a business (therefore = B2B), AND the breach is so slight that it would be unreasonable for the buyer to reject the goods, the breach MAY be treated as breach of a warranty instead. |
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Term
| Why was s15A SGA 1979 introduced? |
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Definition
| to overcome the problem presented in Acros v Ronaasen [1933] |
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Term
| What does the EU 's48 Sale and Supply of Goods to Consumers Regulations 2002' do? |
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Definition
| If the goods do not conform, the consumer may request that the goods are repaired or replaced within a reasonable period of time, without significant inconvenience to the buyer, and the seller must bear any necessary cost of repairing or replacing the goods. |
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Term
| Within your statute books, where do you find the words from EU reg... 's48 Sale and Supply of Goods to Consumers Regulations 2002' |
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Definition
| It appears to have been placed within the Sale of Goods Act, on p.94-95. |
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Term
| If the parties to a contract classify whether terms within the contract are conditions/warranties, what happens? |
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Definition
| The courts will generally give effect to parties expressed intentions |
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Term
| Lombard v Butterworths [1987] |
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Definition
CASE SHOWS JUST HOW FAR THE COURTS ARE WILLING TO GO IN ORDER TO GIVE EFFECT TO THE PARTIES INTENTIONS W.R.T WHETHER A TERM IS A CONDITION OR A WARRANTY.
D hired computers from C
Clause of contract = 'punctual hire payments are of the essence'.
If you say something is 'of the essence' in a commercial contract, you are saying it is a condition
On two occasions, the D made payments 1 day late
As a result, the C 'accepted the repudiation', claimed back the CPUs,
claimed back the late payments, AND claimed all future payments (2yrs worth)
(obviously the Cs got a GREAT deal out of it) (expectation damages)
HELD - courts treated the term as a condition. Therefore, C got the lot that they were claiming for. |
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Term
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Definition
COURTS SOMETIMES WONT GIVE EFFECT TO EXPLICIT TERMS W.R.T WHETHER A TERM IS A CONDITION OR A WARRANTY
'PARTIES CAN'T HAVE INTENDED IRRATIONAL OUTCOMES'
C = manufacturer of machinery
D have the UK distribution rights for the machinery in the UK
D's role involves going around to certain manufacturers in the UK and showing them all of the C's new products
in the contract between the C & D clause which says 'it is a condition of the contract that Wickman shall attend each of the six named manufacturers at least once every week for the purpose of soliciting business for the next 4.5 years'
Contract doesn't mention sickness, holidays, etc...
MADNESS
D's struggled to keep up with the weekly visits
Cs sue D for breach of condition
HELD - clause was NOT a condition (despite the contract saying it was)
'USE OF THE WORD CONDITION IS AN INDICATION - EVEN A STRONG INDICATION - OF THE PARTIES' INTENTION BUT IT IS BY NO MEANS CONCLUSIVE. THE MORE UNREASONABLE THE RESULT THE MORE UNLIKELY IT IS THAT THE PARTIES CAN HAVE INTENDED IT...' |
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Term
| Upjohn LJ provides guidelines on what a condition is (in the case of Hong Kong Fir). What does he say? |
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Definition
| A condition goes to the root of the contract (same definition as in Poussard) |
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Term
| Diplock LJ provides guidelines on what a condition is (in the case of Hong Kong Fir). What does he say? |
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Definition
| A condition is a term, breach of which deprives the innocent party of substantially the whole benefit of the contract' |
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Term
| There are a couple terms which (through precedent) will ALWAYS make the clause a condition. What are they? |
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Definition
a) Expected ready to load
b) Time of performance |
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Term
| What does 'expected ready to load' mean, and do? |
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Definition
| It means that the ship will be ready at a specific term. Inclusion of these words in a term causes breach of the term to be breach of a condition. |
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Term
| The Mihalis Angelos [1971] |
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Definition
CASE WHICH SET THE PRECEDENT THAT BREACH OF AN 'EXPECTED READY TO LOAD' CLAUSE = BREACH OF A CONDITION... ALWAYS... BECAUSE OF A NEED FOR CERTAINTY.
Charterparty (hire contract for a ship)
Owners of the ship have to give an expected ready to load date for the hirers
Owners say it will be expected ready to load on 01/07
Hirers of the ship intend on using the ship to transport a precious mineral
However, due to the outbreak of war, the mineral/cargo won't be ready for 01/07 & therefore they didn't need the ship on that date
Ship owners sue the hirers for breach (because hirers wouldn't have cargo in time)
HELD - it then transpired that the ship owners had lied about when the ship would be ready to load, it wouldn't have been ready to load until the 14th July.
Therefore, turned sour for the ship owners.
Court held that 'expected ready to load' = a condition. Therefore, the ship owners had breached first, because the expected ready to load date was incorrect |
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Term
| What does 'time of performance' mean, and do? |
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Definition
| It sets a time for when performance of something in the contract occurs. Inclusion of it in a term makes breach of the term a breach of a condition. |
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Term
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Definition
CASE WHICH SET THE PRECEDENT THAT BREACH OF A 'TIME OF PERFORMANCE CLAUSE' WILL ALWAYS = BREACH OF A CONDITION
YOU'RE EITHER ON TIME, OR YOU'RE NOT
Ship owners had to give the hirers of the ship 15 days notice of when the ship would be ready to sail.
However, they only gave them 11 days notice.
HELD - time of performance clause will always be treated as breach of condition. (you're either on time, or you're not... therefore, how can you treat it as breach of anything other than a condition. |
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Term
| What is an 'innominate term'? |
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Definition
| A term which isn't clearly a condition or a warranty. It is a term which is defined/categorised on the basis of the effects of it's breach. If the effects of the breach are severe, the term is treated as a condition. If the effects of the breach are not severe, the term is treated as a condition. |
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Term
| What benefit is derived from having innominate terms? |
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Definition
| Gives the courts flexibility. Allows the courts to provide a remedy which is more appropriate to the consequences of the breach. |
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Term
| What are the disadvantages |
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Definition
Uncertainty.
The innocent parties rights will always be uncertain... victim won't know whether they can terminate or not, as they don't know whether the judiciary will treat the breach as breach of a condition, or breach of a warranty. |
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Term
| Hong Kong Fir v Kawasaki [1962] |
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Definition
CASE IN WHICH INNOMINATE TERMS WERE FIRST FORMALLY INTRODUCED
D hired ship from C
Contract said the ship was seaworthy
Hire contract was for 2 years
Within weeks of the hire, the ship stopped working
Of the first 7.5 months of the hire, the ship spent 4 months being repaired.
The hirers of the ship claimed breach of a condition, because the ship was not seaworthy
Therefore, hirers claimed they had the right to walk away from the contract
Owners of the ship sued the hirers for wrongful repudiation
HELD - 'seaworthy' was not a condition of the contract. because seaworthy was such a general term, it could be breached in many ways e.g. if a nail was missing from a window, etc. Therefore, court refused to recognise 'seaworthy' as automatically making a term a condition. Instead, court decided to look at the seriousness of the consequences of the breach to decide whether the hirers should be given a warranty remedy, or a condition remedy. Because there were still 17months to go on the contract, it was held not to a breach which went to the root of the contract, therefore = breach of a warranty.
Therefore, hirers of the ship had to pay the ship owners damages for wrongful repudiation. |
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Term
| In Hong Kong Fir [1962], why did the court refuse to find that inclusion of the word 'seaworthy' in a term automatically rendered the term as a condition? |
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Definition
Because seaworthy was too general a term. If e.g. a window was busted, the ship would arguably not be sea worthy, or if a nail was missing etc...
Therefore, court decided that there are some terms which can't readily be identified as a warranty or a condition, and instead, in order to determine how the term is classified, the court must look to the consequences of the breach & decide the most appropriate remedy |
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Term
| In Hong Kong Fir [1962], the ship which had been hired had been out of action for 4 months & there were still 17months to go on the contract. Did the courts find that this was sufficiently serious to = breach of a condition, or instead breach of a warranty? |
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Definition
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Term
| Aerial Advertising Co v Batchelor Peas [1938] |
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Definition
CASE WHICH CAME BEFORE HONG KONG FIR, IN WHICH THE JUDGE KIND-OF USED THE INNOMINATE TERM PRINCIPLE
Ds hired Cs to fly advertising banner
Contract term = every time the C's would go up with the banner, Cs had to phone Ds to tell them they were going up
On one occassion, the pilot went up & forgot to inform anyone
It just so happened to be 11th November at 11:00am.
Pilot flew over Salford during 2 minute silence
Salford boycotted Batchelow peas
HELD - 'on any other day, at any other time, this would have = breach of a warranty. But because of the severity of the consequences on this occasion, breach = breach of a condition. Therefore, Ds were entitled to terminate the contract. |
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Term
| Which part of which Act will ALWAYS be dealt with as an innominate term? |
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Definition
s13 Sale of Goods and Services Act.
'have to carry out a service with reasonable care and skill' |
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Term
| s13 Sale of Goods and Services Act... what is significant about this? |
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Definition
| It is ALWAYS dealt with as an innominate term. |
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Term
| If X breaches a term of a contract he has with Y. What risk is involved in Y accepting the repudiation and terminating the contract? |
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Definition
| Because the term may not necessarily be a condition (barring some situations). Therefore, judiciary may find it to be a warranty. Therefore, Y will be liable for wrongful repudiation. |
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Term
| Which person is the person who repudiates? |
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Definition
| The person who breaches (a condition) |
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Term
| Which person is the person who 'accepts the repudiation'? |
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Definition
| The innocent party (in a contract where a CONDITION has been breached). If only a warranty has been breached, the innocent party does not have the right to treat the contract as repudiated. |
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Term
| What does it mean to 'accept a repuditary breach'? |
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Definition
| Accept that the contract has been terminated by the breach of a condition. |
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