CLASSIFICATION OF TERMS

•Lecture 2
•Classification of terms and ‘express’ terms
•The traditional classification of terms
•Conditions: A condition is an essential term of the contract which goes to the heart of the contract
•Warranties: A warranty, on the other hand, is a lesser, subsidiary term of the contract. These are collateral to the main purpose of the contract
•The importance of the distinction
•A breach of a condition enables the party who is not in breach of the contract (whatever the gravity of the breach) either to terminate the performance of the contract and recover damages for the breach or to affirm the contract and recover damages for the breach
•A breach of a warranty only enables the innocent party to claim damages, and must continue to perform his obligations under the contract.
•The immergence of innominate terms
•There are many contractual undertakings which cannot be categorised as being "conditions" or "warranties"
•some breaches will, and others will not, give rise to an event which will deprive the innocent party of the substantial benefit expected from the contract [Per Diplock in HongKong Fir Shippingv Kisen(1962)]
•Cont.
•the legal consequences of a breach of such a term depend on the nature of the event and on the consequence of the breach
•See the Hansa Nord [1976] where the court took into consideration the seriousness of the consequence of the breach
•How to classify terms? Contractual certainty v. contractual fairness
•Contractual certainty mandates an approach which focuses on the nature of the term broken, thus leading to remedial rigidity
•in contrast contractual fairness focuses on the consequences of the breach, which leads to remedial flexibility
•Express terms which are orally expressed
•A contract of sale like any other contract will include express terms in addition to the statutory implied terms. These can be expressed oraly.
•Express terms which are incorporation by a signature
•“In an ordinary case, where an action is brought on a written agreement which is signed by the defendant, the agreement is proved by proving his signature, and, in the absence of fraud, it is wholly immaterial that he has not read the agreement and does not know its contents” (Parker v South Eastern Rail) and (L‘estrange v Graucob [1934] )
•Express terms which are included in a written agreement
•Where the parties reduce their agreement into writing without signing it, there must be evidence independently of the agreement itself to prove that the defendant was ad idem to it

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