9084 · 3.2.3
Status of terms flashcards
Revision flashcards for Cambridge 9084 Status of terms (syllabus 3.2.3). Flip, recall, then mark a real past-paper question.
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Remedy for breach of condition?
Innocent party may **terminate** the contract (repudiate) and claim **damages** for any loss suffered. This is a repudiatory breach.
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Remedy for breach of warranty?
**Damages only**. The contract continues, and the innocent party has no right to terminate. Key case: *Bettini v Gye*.
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What is the 'Hong Kong Fir test' for an innominate term?
The court asks whether the breach has deprived the innocent party of 'substantially the whole benefit' of the contract. If yes, it is treated like a breach of condition (repudiation + damages). If no, it is treated like a breach of warranty (damages only).
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How are contractual terms classified?
Terms can be classified by **statute** (e.g., Sale of Goods Act 1979), by the **courts** through precedent, or by the **parties** themselves in the contract. However, the courts are not always bound by the parties' labels.
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What is an anticipatory breach?
When one party makes it clear, before the performance date, that they will not perform their contractual obligations. The innocent party may **terminate immediately** and sue for damages, or wait until the performance date. Key case: *Hochster v De La Tour*.
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What happens if a party wrongfully terminates a contract?
If a party terminates the contract for a breach that is not repudiatory (e.g., a breach of warranty), they themselves are in repudiatory breach of contract and can be sued for damages by the other party.
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What is a condition in contract law?
A major term that is fundamental to the contract, going to its very root. A breach gives the innocent party the right to repudiate the contract (end it) and claim damages. Key case: *Poussard v Spiers and Pond*.
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What is a warranty in contract law?
A minor, subsidiary term of the contract. A breach only entitles the innocent party to claim damages for their loss; the contract itself remains in force. Key case: *Bettini v Gye*.
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Define an innominate (or intermediate) term.
A term not classified as a condition or warranty at the outset. The legal remedy for its breach is determined by the seriousness of the breach's consequences. Key case: *Hong Kong Fir Shipping*.
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Can parties decide for themselves if a term is a condition?
Parties can label a term a 'condition', which shows their intention. However, the courts are not bound by this label and may overrule it if it produces an unreasonable result, as seen in *Schuler AG v Wickman Machine Tool Sales Ltd*.
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What was the key principle in *Lombard North Central v Butterworth*?
That making timely payment 'of the essence' of a hire-purchase contract successfully made it a condition, so any late payment was a repudiatory breach. This shows courts can uphold the parties' classification when it reflects the commercial importance of the term.
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What is the effect of s.15A of the Sale of Goods Act 1979?
For non-consumer sales, if a breach of an implied condition (from ss 13-15) is so slight that it would be unreasonable for the buyer to reject the goods, the breach is treated as a breach of warranty (damages only).
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Give an example of a term classified as a condition by statute.
Section 12 of the Sale of Goods Act 1979 implies a condition that the seller has the right to sell the goods. A breach of this always allows the buyer to repudiate the contract and recover the full price.
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What is the difference in outcome between Poussard v Spiers and Bettini v Gye?
In *Poussard*, the singer's failure to appear on opening night was a breach of condition, allowing termination. In *Bettini*, the singer's late arrival for rehearsals was a breach of warranty, allowing only damages. This highlights the difference between a term going to the 'root' of the contract versus a subsidiary term.