Lecture notes
Complete Notes on Contractual Remedies for Ulaw PgDL
- Module
- Contract
- Institution
- University Of Law (ULaw)
Complete Notes for Contractual Remedies for Ulaw PgDL
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Contractual RemediesMarch 19, 2023
1 Conditions and Warranties
• The classical approach in contract classifies terms as either being condi-
tions or warranties.
• A condition is a major term or a term going to the root of the contract.
• A warranty is a minor, less important, term.
• To decide whether a term in a contract is a condition or a warranty, the
court applies an objective test: would a reasonable person think the parties
intended the term to be a condition or a warranty.
• In applying this test, the court will look at the circumstances surround-
ing the making of the contract, the contract as a whole, and whether
the parties have described the term as a condition or a warranty in the
contract.
• If the court decides that the term is a condition, and the contract has not
been fully performed, the innocent party will usually have the option of
terminating the future performance of the contract and obtaining damages
for any loss suffered.
• This is the case even if the innocent party have only suffered minor loss
or damage.
• If the court decides the term is a warranty, the innocent party cannot
terminate the contract; they can only sue for damages for loss suffered.
• This the case even if the innocent party has suffered serious loss or damage.
• As stated, the court will take into account whether the parties have de-
scribed a particular term as a condition or a warranty.
• The use of the word ‘condition’ raises a presumption that it is used in the
legal sense; however, this may be rebutted from evidence of the contract
as a whole.
1
, • In Schuler v Wickman Machine Tool Sales Ltd [1974] AC 235, HL, al-
though the parties had described a particular term as a being a ‘condi-
tion,’ the court decided that the parties had not intended to use the word
in its strict legal sense.
• This was because if the term called a ‘condition’ was indeed one, then this
would bring about unreasonable result. So, this was unlikely to be what
the parties had intended despite the term being called a ‘condition’ in the
contract.
• Although this distinction between warranties and conditions has its ben-
efits, it also has its detriments.
• A party may use a breach of condition as an excuse to end the contract
even where the breach is fairly minor.
• Moreover, also means that if a term is a warranty, the innocent party
cannot terminate even if the breach is major; the only remedy available
to them will be damages.
2 Innominate Terms
• Aside from the classical approach to contract which classifies terms as
either conditions or warranties, a modern approach classifies terms as in-
nominate.
• An innominate term is one which is neither a condition nor a warranty.
• Innominate terms also referred to as ‘intermediate terms.’
• This type of term was established in Hong Kong Fir Shipping Co Ltd v
Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26.
• As said by Diplock LJ, with respect to innominate terms, it is necessary
to wait until the breach of contract has occurred to decide whether the
innocent party should be allowed to terminate the future performance of
the contract.
• In other words, if the breach deprives the innocent party of substantially
the whole benefit of the contract they can terminate; however, if not, then
they cannot terminate.
3 The Approach Taken By The Courts
• The modern and classical approaches to the classification of contractual
terms exist side by side.
2
, • Thus, subject to some restrictions, it is up to the court to decide either to
adopt the classical approach and classify terms as conditions or warranties
or to adopt the approach and classify terms as innominate.
• There are, however, some restrictions.
• Parties may make it clear in their contract that a particular term is a
condition or a warranty.
• Also, a statute may express a particular term to be a condition or a
warranty.
• The terms implied by ss 13 and 14 of the SGA 1979 and ss 3 to 4 of the
SGSA 1982 are described as being conditions.
• The terms implied by ss 13 to 15 of the SGSA 1982 about the service
supplied are innominate.
4 Common Law and Equitable Remedies for Breach
of Contract
• The common law remedies for breach of contract that we will focus on
are:
• (a) Damages;
• (b) Action for an agreed sum; and,
• (c) Termination.
• The equitable remedies for breach of contract that we will focus on are:
• (d) Specific Performance; and,
• (e) Injunction.
• And the other remedies of:
• (f) Restitution (including the restitutionary damages of account of profit
and negotiating damages); and
• (g) Guarantees and indemnities.
• Notice that a claimant will have a choice between the remedies that they
use; they are not mutually exclusive.
• As such, sometimes these remedies overlap; there may be a claim in dam-
ages and restitution, for example.
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