The essential feature of a term is that it is a subsidiary non essential term

The essential feature of a term is that it is a

This preview shows page 7 - 10 out of 15 pages.

The essential feature of a term is that it is a subsidiary, non-essential term, breach of which only gives rise to an action for damages by the innocent party . In insurance law, ‘warranty’ sometimes means an essential term. Breach of warranty entitles the innocent party to damages only ( Hong Kong Fir Shipping Co Ltd v Kawasaki Kaisha Ltd ). Intermediate (innominate) Terms 7
Image of page 7
Contract Law: Contractual Terms Where there was a breach, the strict classification of conditions and warranties would allow a non-defaulting party to treat the contract as being at an end, even where the party had not suf- fered any significant losses, this was perceived as an abuse of the classification. The court therefore developed a more flexible approach to the classification of terms, en- couraging performance 7 by limiting the circumstances in which a non-defaulting party can treat the contract as at an end. Unless specifically agreed by the parties or determined by legislation, breach of an inter- mediate term entitles the innocent party to treat the contract as being at an end only if the breach has caused the innocent party to be substantially deprived of the whole benefit intended for him under the contract . Principles in applying the classification of terms Sale of Goods legislation defines certain implied terms as either conditions or warranties. 8 The parties may also designate a term as a condition (or a condition precedent), warranty or interme- diate term. Where they do so, this designation will generally be respected by the court. For ex- ample, in the case of a breach of a condition, that breach, however small, will give rise to a right to repudiate, unless such a construction produces a result so unreasonable that the parties could not have intended it, and if there is some other possible and reasonable construction. Exemption and Limitation Clauses An exemption or exclusion clause is an express contractual term which seeks to exclude or limit contractual or tortuous liability of one of the parties under the contract. The exclusion of or limi- tation on liability can relate to exclusion of terms implied by the court, by statute or by custom or to statements made during negotiation or before entry into the agreement . The common law rules governing exemptions clauses are stated below. Standard form Agreements Exemption clauses are often found in standard form contracts, such as contracts made subject to the printed terms drawn up by one of the parties. Examples include the “conditions of carriage” in airline tickets, or “terms and conditions” in mobile phone contracts. Standard form contracts are increasingly common, and the average person may enter into these contracts without ever having negotiated these terms. 7 Cehave NV v Bremer [1976] QB 44 8 S 11 8
Image of page 8
Contract Law: Contractual Terms From a consumer’s perspective in particular, he is rarely in a position to negotiate, ques- tion or vary these terms.
Image of page 9
Image of page 10

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture