Certainty is thereby achieved but uncertainty can

certainty is thereby achieved, but uncertainty can still arise in relation to the prior
question of whether the term which has been broken is actually a condition. For
example, in The Naxos [1990] 1 WLR 1337 a majority of the House of Lords held
that the obligation of the seller to have the cargo ready for delivery at any time within
the contract period was a condition, whereas a majority of the Court of Appeal and
the first instance judge were of the opinion that it was not. This uncertainty is,
however, largely confined to previously unclassified terms and, while it should not be
ignored, it should not detract from the principal point which is that the classification
of a term as a condition does give rise to a greater degree of certainty in commercial
transactions.
But the cost of this emphasis on the need to promote certainty is an element of
injustice, in cases such as Arcos v Ronaasen (above), where the motive for
terminating the contract was that the contract had turned out to be a bad bargain for
the innocent party. Such injustice could be largely avoided if the critical factor in
deciding whether a term was a condition (and hence whether the innocent party was
entitled to terminate performance of the contract) was to become the consequences of
the breach (a point acknowledged by Beatson
LJ
in Heritage Oil and Gas Ltd v
Tullow Uganda Ltd [2014] EWCA Civ 1048; [2014] 2 CLC 61, [33]). Then the
innocent party would only be entitled to terminate performance of the contract where
the consequences to him of the breach were sufficiently serious (indeed there was
authority for such a proposition in the early case of Boone v Eyre (1777) 1 H Bl 273,
before the emphasis switched to the importance of the term which had been broken in

cases such as Behn v Burness (1863) 3 B & S 751 and Bettini v Gye (1876) 1 QBD
183). Yet the cost of such a shift in emphasis would be the sacrifice of a degree of
certainty.
A further criticism which has been levelled against too great a willingness to
classify a term as a condition is that it encourages termination of contracts rather than
their performance. As Roskill
LJ
stated in The Hansa Nord [1976] QB 44:
in principle, contracts are made to be performed and not to be avoided according to the
whims of market fluctuation and where there is a free choice between two possible
constructions I think the court should tend to prefer that construction which will ensure
performance, and not encourage avoidance of contractual obligations.
The Hansa Nord was a case, like Arcos v Ronaasen , where the buyer was searching
for a way out of a bad bargain and it is true that, in this context, a refusal to classify a
term as a condition is more likely to lead to contractual performance. But in other
contexts this is not so. The classification of a term as a condition can give an
incentive to a would-be contract-breaker to perform his obligations under the contract
because breach will expose him to a claim for loss of bargain damages. The hirer in
Lombard North Central plc v Butterworth (above) will, presumably, take greater