Types of Terms

• Terms of a contract are what the parties have agreed between themselves - they define the obligations of both parties
• Condition

  • An important term
  • If this isn't complied with then the main purpose of the contract has been destroyed
  • The contract can be repudiated if the condition is not met - Poussard v Spiers and Pond
• Warranty

  • A minor term
  • If this isn't complied with, then damages can be claimed - the contract does not come to an end
  • Bettini v Gye
• Innominate terms

  • It is unclear whether this is a condition or warranty
  • Judge decides whether it is a condition or warranty depending on the consequences of the breach
• Substantial benefit is one factor considered when treating innominate terms

  • Breach denies you of the substantial benefit of the contract = condition
  • Breach does not deny you of the substantial benefit of the contract = warranty
  • Hong Kong Fir Shipping
• Intention of the parties is another factor considered when treating innominate terms

  • If there is an error, the judge can make a decision based on what is just, rather than following a rule that can lead to injustice
  • Arnold v Britton - Judged on the basis of what the reasonable person having all background knowledge would have understood the contract to mean