Week 1 Termination for Breach Breach occurs when one party fails to perform at the time or to standard required by contract. Breach allows for damages, but only certain terms allow for contract termination. What type of term has been breached? Condition (or essential) If breached, contract terminated. Strict performance required. – Warranty (or non-essential) If breached, contract remains (damages as remedy) – Intermediate/inordinate If breached, may terminate if effect of breach deprives the innocent – party of the substantial benefits from the contract. Condition breach guide – What is a condition? If the term requires strict performance then a condition. Any breach, however slight, allows for termination (Arcos v Ronaansen; Tramways v Luna Park). substantial failure in the performance would enable the defendant to treat the contract ‘a as at an end’ (Associated Newspapers Ltd v Bancks). How do you check if a term is a condition? Test of essentiality is promise so important that promisee would not have entered into – the contract unless the term was strictly performed? (Tramways v Luna Park). What factors help determine that a term is a condition? The character of a term e.g. is very general and party could fail term by one – ‘seaworthy’ missing nail up to the sinking of the ship (Hongkong Fir v Kawasaki). Have previous decisions classified term as a condition? Need for certainty if a court calls a general term a condition, does it cast doubt into all – similar contracts? Is the language promissory (Tramways v Luna Park)? Is this particular term emphasised over others? e.g. One term says guarantee…’, the ‘we others don’t. Does labelling a term a mean it is a condition? ‘condition’ Not necessarily, as word often used in a non-legal manner.
Week 1 Termination for Breach Breach occurs when one party fails to perform at the time or to standard required by contract. Breach allows for damages, but only certain terms allow for contract termination. What type of term has been breached? Condition (or essential) – If breached, contract terminated. Strict performance required. Warranty (or non-essential) – If breached, contract remains (damages as remedy) Intermediate/inordinate – If breached, may terminate if effect of breach deprives the innocent party of the substantial benefits from the contract. Condition breach – guide What is a condition? If the term requires strict performance then a condition. Any breach, however slight, allows for termination (Arcos v Ronaansen; Tramways v Luna Park). ‘a substantial failure in the performance would enable the defendant to treat the contract as at an end’ (Associated Newspapers Ltd v Bancks). How do you check if a term is a condition? Test of essentiality – is promise so important that promisee would not have entered into the contract unless the term was strictly performed? (Tramways v Luna Park). What factors help determine that a term is a condition? The character of a term – e.g. ‘seaworthy’ is very general and party could fail term by one missing nail up to the sinking of the ship (Hongkong Fir v Kawasaki). Have previous decisions classified term as a condition? Need for certainty – if a court calls a general term a condition, does it cast doubt into all similar contracts? Is the language promissory (Tramways v Luna Park)? Is this particular term emphasised over others? e.g. One term says ‘we guarantee…’, the others don’t. Does labelling a term a ‘condition’ mean it is a condition? Not necessarily, as word often used in a non-legal manner.
Contract-B-Summary.docx