Contract Terms

Question 1

Types of Terms and their cases.

Answer 1

condition: Essential term.
Breach = termination. (Poussard v Spiers)
Warranty: Minor term.
Breach = damages only. (Bettini v Gye)
Innominate: Court assesses seriousness. (Hong Kong Fir)

Question 2

Innominate term principle

Answer 2

Breach must deprive party of substantially the whole benefit.

Case: Hong Kong Fir Shipping (1962) – Engine breakdown did not justify termination.

Question 3

Importance of statement

Answer 3

A pre-contract statement may become a term.

Case: Bannerman v White (1861) – Sulphur-free hops were a key term

Question 4

Implied terms

Answer 4

By statute (e.g. SGA 1979), custom, or necessity.

Case: The Moorcock (1889) – Mooring safety implied for business efficacy.

Question 5

Interpretation

Answer 5

Interpretation

Literal meaning preferred unless absurd.

Case: Arnold v Britton (2015) – Harsh clause upheld because it was clear.

Question 6

Good faith in long term contracts.

Answer 6

Some contracts may carry an implied duty of good faith.

Case: Yam Seng v ITC (2013) – Introduced good faith in relational contracts.

Question 7

Statutes

Answer 7

Sale of Goods Act 1979 – ss.13-15 (description, quality, fitness).

Consumer Rights Act 2015 – s.9 (satisfactory quality), s.64 (price terms).

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