Terms of a Contract IITerms of a Contract II
Classification of TermsClassification of Terms
11
Types of termsTypes of terms
ConditionsConditions
WarrantiesWarranties
Innominate TermsInnominate Terms
22
Breach of condition : EffectBreach of condition : Effect
Innocent party has right of electionInnocent party has right of election
Either: Either:
To affirm & continue the contract AND To affirm & continue the contract AND claim damages for loss occasioned by claim damages for loss occasioned by breachbreach
OROR
To terminate and claim damages To terminate and claim damages immediatelyimmediately
33
Breach of warranty : EffectBreach of warranty : Effect
Breach of a warranty only allows the Breach of a warranty only allows the innocent party to claim damages, not to innocent party to claim damages, not to terminateterminate
44
Distinguishing condition & warrantyDistinguishing condition & warranty
Conditions - Conditions - Poussard v SpiersPoussard v Spiers (1876) (1876)
Warranties - Warranties - Bettini v GyeBettini v Gye (1876) (1876)
55
Types of ‘condition’Types of ‘condition’
Promissory conditionsPromissory conditions
Contingent conditions Contingent conditions
– Condition precedentCondition precedent– Condition subsequentCondition subsequent
66
How is a condition classified?How is a condition classified?
StatuteStatute
Parties intentionsParties intentions
JudiciaryJudiciary
77
Statutory classificationStatutory classification
Sale of Goods Act 1979Sale of Goods Act 1979
– S.12S.12 Title – s.12(5A)Title – s.12(5A)
– S.13S.13 Description - s.13(1A)Description - s.13(1A)
– S.14S.14 Fitness for purpose - s.14(6)Fitness for purpose - s.14(6)
– S.15S.15 Sample s.15(3)Sample s.15(3)
All conditions UNLESS S.15(A) appliesAll conditions UNLESS S.15(A) applies
88
S 15A SGA ‘79S 15A SGA ‘79Arcos v Ronaasen 1933Arcos v Ronaasen 1933
Where BUSINESS TO BUSINESS (B2B) contractWhere BUSINESS TO BUSINESS (B2B) contract
Such Such SLIGHTSLIGHT breaches of s 13, 14 or 15 so that breaches of s 13, 14 or 15 so that
REJECTIONREJECTION of goods of goods UNREASONABLEUNREASONABLE
Breach Breach MAYMAY be treated as breach of be treated as breach of WARRANTYWARRANTY
Sale and Supply of Goods to Consumers 2002Sale and Supply of Goods to Consumers 200299
Sale and Supply of Goods Regs 2002 Sale and Supply of Goods Regs 2002 Amendments to SGSA 1979Amendments to SGSA 1979
S. 48(A),(B),(C) (D) SGA 1979If goods do not conform consumer may request
that:
the goods are repaired or replaced within a reasonable period of time,
without causing significant inconvenience to the consumer,
with the seller bearing any necessary cost of repairing or replacing the goods. 1010
Classification by the partiesClassification by the parties
Courts usually give effect to parties Courts usually give effect to parties intentionintention
Lombard North Central v Butterworths Lombard North Central v Butterworths 19871987
But not always…But not always…
Schuler v Wickman [1974]Schuler v Wickman [1974]
1111
Where the Judiciary steps in…Where the Judiciary steps in…‘‘Use of the word ‘condition’ is an indication – Use of the word ‘condition’ is an indication – even a strong indication – of [the parties’ even a strong indication – of [the parties’ intention but it is by no means conclusive.intention but it is by no means conclusive.The fact that a particular construction leads to a The fact that a particular construction leads to a very unreasonable result must be a relevant very unreasonable result must be a relevant consideration. The more unreasonable the consideration. The more unreasonable the result the more unlikely it is that the parties can result the more unlikely it is that the parties can have intended it…’ have intended it…’
Schuler v Wickman Schuler v Wickman [1974] per Lord Reid[1974] per Lord Reid
1212
Generally: JudiciaryGenerally: Judiciary
Definition of ‘condition’ – guidelines Definition of ‘condition’ – guidelines
Hong Kong Fir v Kawasaki Kisen Kaishi [1962]Hong Kong Fir v Kawasaki Kisen Kaishi [1962]
‘‘goes to the root’ of the contract goes to the root’ of the contract Per Upjohn LJPer Upjohn LJ
a term ‘breach of which deprives the innocent a term ‘breach of which deprives the innocent party of substantially the whole benefit of the party of substantially the whole benefit of the contract’contract’Per Diplock LJPer Diplock LJ
1313
Specific terms: JudiciarySpecific terms: Judiciary
Precedents which have established Precedents which have established certain terms as conditionscertain terms as conditions
1. Expected ready to load1. Expected ready to load
The Mihalis Angelos [1971]The Mihalis Angelos [1971]
2. 2. Time of performanceTime of performanceBunge v Tradax [1981]Bunge v Tradax [1981]
1414
2020thth Century - The innominate term Century - The innominate term
Court looks to ‘Court looks to ‘consequences of the breach’consequences of the breach’
‘…‘…many [terms] cannot be categorised as being many [terms] cannot be categorised as being conditions or warranties… all that can be conditions or warranties… all that can be predicted is that some breaches will and others predicted is that some breaches will and others will not … deprive the [innocent] party of will not … deprive the [innocent] party of substantially the whole benefit’ per Diplock LJsubstantially the whole benefit’ per Diplock LJ
Hong Kong Fir v Kawasaki [1962 ]Hong Kong Fir v Kawasaki [1962 ]
Aerial Advertising Co v Batchelor Peas Aerial Advertising Co v Batchelor Peas [1938] [1938]
NOTE: s.13 SGSA 1982 “reasonable care & skill”NOTE: s.13 SGSA 1982 “reasonable care & skill”
1515
Breach of innominate termBreach of innominate term
innocent party’s rights may be uncertaininnocent party’s rights may be uncertain
Possibility of wrongful repudiation Possibility of wrongful repudiation
Hong Kong Fir [1962]Hong Kong Fir [1962]
1616
Recap : Breach of conditions & Recap : Breach of conditions & warrantieswarranties
Breach of condition: Right of electionBreach of condition: Right of election
– affirm & continue + claim damages ORaffirm & continue + claim damages OR
– terminate + claim damagesterminate + claim damages
Breach of a warranty Breach of a warranty – claimant can only claim damages, not claimant can only claim damages, not
terminateterminate
1717
Conclusions - IncorporationConclusions - Incorporation
Is the statement Is the statement incorporatedincorporated into the into the contract?contract?
Pre-contractual statements Pre-contractual statements
– Express – oral & writtenExpress – oral & written
– Implied terms – common law & statuteImplied terms – common law & statute
1818
Conclusions - classificationConclusions - classification
If incorporated, then how classified?If incorporated, then how classified?
1. In advance1. In advance, at the time of contracting:, at the time of contracting:
By Statute ORBy Statute OR
By the parties (subject to judicial meddling)By the parties (subject to judicial meddling)
1919
ConclusionsConclusions
If incorporated, then how classified?If incorporated, then how classified?
2. After contracting:2. After contracting:
by the courts by the courts using the innominate term using the innominate term approachapproach
This allows flexibility at the expense of This allows flexibility at the expense of certaintycertainty
2020
Pervasive Topic Pervasive Topic
BreachBreach
Exclusion/limitation clausesExclusion/limitation clauses
MisrepresentationMisrepresentation
RemediesRemedies
2121