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Terms Part 2 Notes

GDL Law Notes > GDL Contract Law Notes

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A more recent version of these Terms Part 2 notes – written by Cambridge/Bpp/College Of Law students – is available here.

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Revision: Tort

[TERMS II]
Conditions and Warranties: Traditional View

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Condition: an important term 'going to the root of the contract' o

If a party breaches the innocent party has the right to treat the contract as repudiated with the effect that both parties are released from all future obligations under the contractInnocent party may also sue for damages immediatelyIf the innocent party chooses to affirm the contract, the contract remains in full force but the innocent party may sue in respect to the other party's breach

o

Poussard v Spiers:*

Actress's obligation to perform was a condition: 'it went to the root of the contract'

Warranty: less important term not going to the root o

Only remedy available is to sue for damages i.e. no right to treat contract as repudiated

o

Bettini v Gye: undertaking to take part in rehearsals was a warranty - 'merely partially affects it'

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Parties to a contract may classify the relative importance of terms as they see fit - although this is not always decisive. It is ultimately open to the court to decide: o

Schuler v Wickman:HL ignored the clear wording of the contract on the grounds that to interpret the particular term as a condition was so unreasonable that it could not have been intended by the partiesIf a term is stipulated as a condition but the court deems otherwise, the innocent party will find themselves in breach for wrongful repudiation

o

Contrast: Lombard v Butterworths: Butterworths were late twice and Lombard terminated and sued to recover expectation damages (allowed: time 'of the essence' was a condition)

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Sale of Goods Act 1893: adopts the traditional division of terms into conditions and warranties

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