Conditions

Conditions

A condition is a major term or the 'essence' of a contract which goes to the root of the contract. If a condition is breached the innocent party is entitled to repudiate (end) the contract and claim damages.

Case example:

Poussard v Spiers (1876) 1 QBD 410

Madame Poussard entered a contract to perform as an opera singer for three months. She became ill five days before the opening night and was not able to perform the first four nights. Spiers then replaced her with another opera singer.

Warranties

Warranties are minor terms of a contract which are not central to the existence of the contract. A breach of warranty is usually not a valid reason for voiding a contract but it entitles the aggrieved party to claim damages but can not end the contract.

Case example:

Schuler v Wickman Tools

In this case the House of Lords considered the meaning of the word "condition" in a term of a contract. Schuler maintains that the use of the word 'condition' is in itself enough to establish this intention. Use of the word 'condition' is an indication--even a strong indication--of such an intention but it is by no means conclusive. 



Innominate terms

Rather than classifying the terms themselves as conditions or warranties, the innominate term approach looks to the effect of the breach and questions whether the innocent party to the breach was deprived of substantially the whole benefit of the contract. A court or an arbitrator must evaluate the seriousness of the breach and its effects before any such decision can be made.

Case example:

Hong Kong Fir Shipping v Kawasaki Kisen Kaisha [1962] 2 QB 26 Court of Appeal

A ship was chartered to the defendants for a 2 year period. The agreement included a term that the ship would be seaworthy throughout the period of hire. The problems developed with the engine of the ship and the engine crew were incompetent. Consequently the ship was out of service for a 5 week period and then a further 15 week period. The defendants treated this as a breach of condition and ended the contract. The claimants brought an action for wrongful repudiation arguing the term relating to seaworthiness was not a condition of the contract.

Held:

The defendants were liable for wrongful repudiation. The court introduced the innominate term 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