P and D had an agreement for D to distribute and sell P’s products. Clause 7 included conditions such as the fact that D had to visit a list of potential buyers once every week and these were stated explicitly as conditions. There was also a clause 11, which said that the agreement had to last until 31st December 1967 and thereafter could be ended by 12 months notice in writing. It also said that either party could terminate the agreement if the other committed a material breach of its obligations and failed to remedy them within 60 days of being required to do so in writing. D failed to fulfil its clause 7 requirements and P terminated the agreement on the grounds that a “condition” was breached. By majority, HL found in favour of D.
Lord Reid (majority): “remedy” means to put something right for the future, although not all breaches can be remedied e.g. leaking confidential info cannot be put right by a promise not to do so again. In this case, failure to visit a firm once out of the 200 times that the contract required was not an irredeemable loss and could be remedied within clause 11’s meaning. He says that what the contract deemed a “condition” was not using the word in its strict legal sense since a condition in law is something that is so fundamental to the contract that its breach merits termination. This was not the case here since missing one visit was fairly irrelevant. This contradicts Upjohn LJ in Hong Kong Fir that parties re free to decide what the conditions are: this is a key freedom in contract because it is for the parties, not the courts, to say which terms are important enough to make contracts worth entering. He says that “the more unreasonable the result, the more unlikely the parties were to have intended it” i.e. the result of making clause 7 a “condition” would be v.unfair and therefore they can’t have meant it to be a condition. This is illogical reasoning and assumes that people are incapable of making bad bargains.
Lord Wilberforce (dissenting): clause 7 WAS a condition