CONTRACT LAW L4 - Terms - CONDITIONS & WARRRANTIES

Question 1

What can the express or implied terms of a contract be classified as? (3)

Answer 1

Conditions, warranties or innominate terms.

Question 2

What is the general principle if a party breaches a condition? (2)

Answer 2

The innocent party has a right to treat the contract as repudiated and may also sue for damages. If the party chooses to affirm the contract, the contract remains in full effect but the innocent party can still sue for damages with respect to the other party’s breach and waives the right to repudiate.

Question 3

What happens if a party is in breach of warranty? (1)

Answer 3

The only available remedy to the innocent party is to sue for damages and there is not right to treat the contract as repudiated.

Question 4

What does the case of POUSSARD V SPIERS 1876 show? (1)

Answer 4

The distinction between a condition and a warranty is that a condition is an important term ‘going to the root of the contract’.

Question 5

How does HONG KONG FIR SHOPPING CO V KAWASAKI KISEN KAISHA LTD 1962 that the traditional distinction between conditions and warranties is no longer regarded as exhaustive (4)

Answer 5

The court of appeal held that there are many terms that at the outset are neither conditions or warranties but are of innominate nature.
The term in question was that the ship being hired was ‘in every way fitted for ordinary cargo service’ which is a clause that could be breached in a variety of ways from minor to major.
The court advocated looking at ‘does the breach deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract?’
If the answer is yes the term will be treat as a condition but if no the innocent party is only entitled to claim for damages.

Question 6

What is a party that has a committed breach of condition said to have committed? (1)

Answer 6

A repudiatory breach.

Question 7

Does lateness amount to a repudiatory breach? (2)

Answer 7

If there is a requirement that timing is essential then yes but if time is not of the essence it can become so by the innocent party serving a notice on the defaulting party which states time is of the essence.

Question 8

What happens when terms are implied by statute? (1)

Answer 8

The statute will normally specify whether they are conditions or warranties.