Contract Terms: The Status of Terms

Does the term go to the root of the Contract?

Depends on
seriousness of breach
Yes
Innominate Term: No
Has C been deprived of
substantially the whole benefit of
the contract?

Condition: Warranty:
Claimant entitled to termination Claimant entitled to damages only
And Damages.

Condition[s]: "…go so directly to the substance of the contract or, in other words, are so
essential to its very nature that their non-performance may fairly be considered by the other
party as a substantial failure to perform the contract at all."
Wallis, Son & Wells v Pratt & Haynes
[1910] 2 KB 1003, per Fletcher at 1012

Warranty: "...the less important terms of a contract, or those which are collateral to the
main purpose of the contract, the breach of which by one party does not entitle the other to
treat his obligations as discharged."
H Beale, Chitty on Contracts (31st, Sweet & Maxwell, 2014), Ch 12, para 031

Innominate term: "There are, however, many contractual undertakings of a more complex
character which cannot be categorised as being "conditions" or "warranties,"...[o]f such
undertakings all that can be predicated is that some breaches will and others will not give
rise to an event which will deprive the party not in default of substantially the whole benefit
which it was intended that he should obtain from the contract; and the legal consequences
of a breach of such an undertaking, unless provided for expressly in the contract, depend
upon the nature of the event to which the breach gives rise and do not follow automatically
from a prior classification of the undertaking as a "condition" or a "warranty."
Hongkong Fir Shipping v Kawasaki [1962] 2 Q.B. 26
per Diplock LJ at 70

Poussard v Spiers & Pond (1876) I QBD 410

Condition – singer contracted to take part in an opera in November, the first performance
supposed to be on 28th. Claimant attended a number of rehearsals and then took ill so
missed final rehearsal and first four performances of the opera. By the time she was well
enough to perform, a substitute had been located and so the opera company wanted to
terminate her contract. Court said they were able to do this due to the obligation to attend
the final rehearsal and first performances which were conditions of the original contract of
employment.
"...we can, without the aid of the jury, see that it must have been of great importance to the
defendants that the piece should start well, and consequently that the failure of the
plaintiff's wife to be able to perform on the opening and early performances was a very
serious detriment to them."
per Blackburn J at 414

Bettini v Gye (1876) I QBD 183

Warranty- Singer was ill and arrived 3 days late for rehearsals, meant to be rehearsing for 6
days. The courts said the breach of contract wasn’t serious enough as it was for several
months of performances and singer was only 3 days late.
"... [it] depends on the true construction of the contract taken as a whole. Parties may think
some matter, apparently of very little importance, essential; and if they sufficiently express
an intention to make the literal fulfilment of such a thing a condition precedent, it will be
one; or they may think that the performance of some matter, apparently of essential
importance and primâ facie a condition precedent, is not really vital, and may be
compensated for in damages..."
per Blackburn J at 187

Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26

Innominate Term- contract to charter a ship for 24 months, 1 of the terms in the contract
said that the ship would be ssea worthy and when the time came for the ship to be
delivered it wasn’t sea worthy, there was a delay of the shipping of the ship due to
damages. After 4 months it still wasn’t sea-worthy so the hirer tried to terminate the
contract as they missed 4/24 months of their charter. The owner of the ship sued the hirer
for wrongful termination of the contract. COA said that the breach didn’t go to the heart of
the contract.
"...look at the events which had occurred as a result of the breach at the time at which the
charterers purported to rescind the charterparty and to decide whether the occurrence of
those events deprived the charterers of substantially the whole benefit which it was the
intention of the parties as expressed in the charterparty that the charterers should obtain
from the further performance of their own contractual undertakings."
per Diplock LJ at 72

The Mihalis Angelos [1971] I QB 164

The parties’ own labels matter- ship would be expected ready to load at a particular time,
the parties had described it as a condition therefore the courts had said it was a condition.
Therefore if the ship wasn’t ready to load at the time given, the defending party had the
right to terminate the contract.

Schuler AG v Wickman Machine Tools Sales Ltd [1974] AC 235

The parties’ own labels are not conclusive- Defendant who was going to sell big pieces of
equipment made by Schuler and under contract to which Wickman had agreed to sell them,
they promised to make weekly visits to 6 customers over 4.5 years. This was obviously
important to each party as they made it a condition. When Wickman breached this term,
schuler tried to terminate the contract, the HoL refused to see this as a condition of the
contract due to the way the contract was drafted in that Wickman expected 1,400 visits and
it was likely that in a few cases this would be impossible.
"...if Schuler's contention is right, failure to make even one visit entitle them to terminate the
contract however blameless Wickman might be.
This is so unreasonable that it must make me search for some other possible meaning of the
contract. If none can be found then Wickman must suffer the consequences. But only if that
is the only possible interpretation."
per Lord Reid at 251

Stipulations as to time
Starting Point: Time is not of the essence
United Scientific Holdings v Burnley BC [1977] 2 WLR 806
"Time will not be considered to be of the essence unless: (1) the parties expressly stipulate
that conditions as to time must be strictly complied with; or (2) the nature of the subject
matter of the contract or the surrounding circumstances show that time should be
considered to be of the essence; ..."
Halsbury's Laws of England, 4th ed., vol. 9,
para. 481, p. 338