Classification of Terms

Classification of Terms

1. Three categories of contractual term: Warranty, condition & innominate Term

2. Condition

   • Failure to adhere to the condition will deprive the other party of the main benefit of contract
   • Poussard v Spiers & Pond = Where a condition is breached, claimant may sue for damages & terminate contract

3. Warranty

   • Minor term of the contract
   • A contract will continue where a breach occurs
   • Bettini v Gye = Where a breach of warranty occurs, can only sue for damages not terminate the contract

4. Innominate Term

   • Hong Kong Fir Shipping Co v Kawasaki Kisen Kaisha = Courts will look at consequence of breach in deciding what remedy available
   • Innominate terms are terms left over that are not a warranty or condition

5. Test for Conditions & Warranties

   • 1) Intention of Parties = Lombard North Central v Butterworth = If court concludes breach of term couldn't have been intended by parties which gives rise to option of termination then not a condition
   • Schuler v Wickman Machine Tools = Use of term 'condition' not conclusive. Use of word is reflected in parties intentions