The effect of a breach
As we can see from the above examples, the need to differentiate between
terms arises because of the remedies available when a term is breached.
The effect in law of a breach of each type of term can be summarised as
follows:
- The breach of a warranty only entitles the innocent party to damages.
- The breach of a condition results in a choice for the innocent party:
(a) he can repudiate, or end, the contract, or
(b)he can choose to continue with the contract and claim damages instead.The innocent party can, therefore, choose either to repudiate if a condition
is breached, or to affirm (to continue with the contract), and this was
confirmed in the case of Vitol SA v Norelf Ltd (1995). However, if the
innocent decides to affirm, the obligations of that party must be carried out
in the normal way. In Fercometal Sarl v Mediterranean Shipping Co SA
(1988) the original breach may not be used as a reason for the ‘innocent’
party not to perform further duties.
Condition or warranty?
So how do the courts decide whether a term is a condition or a warranty?
There are several approaches:
- The courts can use a traditional approach, looking at the term to decide
if it ‘goes to the root of the matter’ according to the analysis by
Blackburn J in Poussard v Spiers and Pond, if it is a kind of term which
lends itself to this kind of analysis. - The parties may have labelled the terms at the outset – although this is
not necessarily conclusive. - The terms may be of a kind, usually within a consumer contract, for
which provision is made in statute.
110 Contract law
Bettini v Gye (1876)
The plaintiff was a singer engaged to perform with the defendant’s
opera company for a fixed period. He should have attended six days of
rehearsals but was ill and only able to attend three. He recovered in
good time for the performance. It was held that this was a breach of
warranty, as the singer was able to perform, so the breach did not go to
‘the root of ’ the contract, and could be settled by damages.