78 5: Content of contracts Part B The law of obligations
A condition can be defined as follows.
'An important term which is vital to a contract so that its breach will destroy the basis of the agreement. It
may arise from an express agreement between the parties or may be implied by law.
A warranty can be defined as follows.
'A minor term in a contract. If broken, the injured party must continue performance but may claim
damages for the loss suffered.'Poussard v Spiers 1876
The facts: Mme Poussard agreed to sing in an opera throughout a series of performances. Owing to illness
she was unable to appear on the opening night and the next few days. The producer engaged a substitute
who insisted that she should be engaged for the whole run. When Mme Poussard recovered, the producer
declined to accept her services for the remaining performances.
Decision: Failure to sing on the opening night was a breach of condition which entitled the producer to
treat the contract for the remaining performances as discharged.Bettini v Gye 1876
The facts: An opera singer was engaged for a series of performances under a contract by which he had to
be in London for rehearsals six days before the opening performance. Owing to illness he did not arrive
until the third day before the opening. The defendant refused to accept his services, treating the contract
as discharged.
Decision: The rehearsal clause was subsidiary to the main purpose of the contract.Classification may depend on the following issues.
(a) Statute often identifies implied terms specifically as conditions or warranties. An example is the
Sale of Goods Act 1979.
(b) Case law may also define particular types of clauses as conditions, for example a clause as to the
date of 'expected readiness' of a ship let to a charterer: The Mihalis Angelos 1971.
(c) The court may construe what was the intention of the parties at the time the contract was made as to
whether a broken term was to be a condition or a warranty: Bunge Corporation v Tradax SA 1981.
It is important to remember that if the injured party merely wants damages, there is no need to consider
whether the term broken is a condition or a warranty, since either type of breach entitles the injured party
to damages.3.1 Innominate terms
It may not be possible to determine whether a term is a condition or a warranty. Such terms are classified
by the courts as innominate terms.Traditionally, terms were either classified as conditions or warranties and the injured party could choose
to end the contract only for breach of condition. Sometimes a warranty was broken with catastrophic
results, yet the court could not permit the injured party to end the contract because the term broken was
not a condition.
The courts have determined that where the breach deprives the injured party of substantially the whole
benefit of the contract the term broken can be called 'Innominate' and the injured party can choose to end
the contract even if it could not be regarded as a condition: Cehave v Bremer 1975.
If the nature and effect of the breach is such as to deprive the injured party of most of their benefit from
the contract then it will be treated as if the guilty party had breached a condition.FAST FORWARDKey terms