types of terms

• contract terms

  the terms of a contract set out the obligations of the parties under the agreement. contract terms are relevant to questions on 'breach' of contract. terms are classified into types and some breaches can be more significant than others
• types of terms

  • traditional approach (term-based approach)
  • inominate terms (breach based approach)
• the traditional approaches

  • conditions
  • warranties
• conditions

  a term of the contract so important that a failure to perform the obligation would destroy the main purpose of the contract. if a condition is broken, the person suffering the failure is entitiled to end the contract - repudiation (Poussard v Spiers)
• warranties

  a minor term of the contract. only damages can be claimed for a breach of warranty, the contract is not ended and the main purpose of the contract can continue. there is no right to repudiate (Bettini v Gye)
• problem with this approach

  some terms are always conditions and some parties have been able to reject goods and end contracts for reasons that do not impair suitability for the contract purpose (Re Moor)
• innominate terms

  (Hong Kong Fir Shipping) - an innominate term is a term i a contract that is not clearly a condition or warranty, it can only be identified from the effect of its breach

  • if the breach substantially deprives C of the whole benefit of the contract, it should be treated as a condition
  • if the breach doesn't, it should be treated as a warranty
• (Hansa Nord)

  there was no substantial breach of of the term that went to the root of the contract, C could only claim damages (warranty)
• specific situations where terms will be identified as conditions

  • (Lombard v Butterworth) - if a term is identified as a condition by the parties.
  • (Schuler v Wickman) - however if a contract refers to a term as a 'condition', this does not necessarily mean the courts will always agree.
  • (The Mihalis Angelos) - if a term has been identified as a condition in a previous case