This is an extract of our Classification Of Terms document, which we sell as part of our GDL Contract Law Notes collection written by the top tier of Cambridge/Bpp/College Of Law students.
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CLASSIFICATION OF TERMS
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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