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Classification Of Terms Notes

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Terms may be either:
o Conditions: go to the route of the contract.
 Remedy: elect to terminate/affirm contract or to claim damages. NB this election is binding. If elect to sue for damages cannot later request performance.
o Warranties: terms of less importance
 Remedy: damages only.
o Innominate Terms: terms that are neither conditions nor warranties
 Remedy: if the breach deprives the innocent party substantially the whole benefit of the contract then a right of election. If not then only damages are available.
Electing to Terminate/Affirm

No controls on making this election

Professor Brownsword suggests six reasons one might wish to terminate:
 1) Breach shows lack of commitment to contract.
 2) Breach raises concerns about competence of other party
 3) Breach renders the performance of the contract radically different
 4) Proving losses arising from the breach puts the innocent party at risk.
 5) Breach leads to concerns about other party's ability to keep future promises.
 6) Breach leads to concerns about innocent party's ability to keep future promises.
o Schuler v Wickman Machine Tool Sales (1974) -
Wickman was to act as agent in obtaining buyers for panel presses manufactured by Schuler. Clause stated it was a condition for Wickman to send representative to solicit orders once a week, missed a few of these. Another clause gave right to terminate after 60days if a breach remained unremedied. Schuler terminated.
 Majority in HoL held that a few missed visits could be remedied, was not a condition.
 Lord Wilberforce dissented: no basis for the assumption that the parties had adopted "a standard of easygoing tolerance rather than one of aggressive, insistent punctuality and efficiency"
 Lord Reid: construction has an ordinary English meaning as well as the legal meaning.
 Professor McKendrick The key to understanding this case lies in the relationship between clauses 7 and 11 of the parties' contract. Lord Wilberforce would be right if just clause 7, but the contractual machinery in clause 11 meant that other interpretation justified.

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