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Law Notes Contract Law Notes

Breach And Remedies For Breach Notes

Updated Breach And Remedies For Breach Notes

Contract Law Notes

Contract Law

Approximately 1511 pages

Contract law notes fully updated for recent exams at Oxford and Cambridge. These notes cover all the LLB contract law cases and so are perfect for anyone doing an LLB in the UK or a great supplement for those doing LLBs abroad, whether that be in Ireland, Hong Kong or Malaysia (University of London).

These were the best Contract Law notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LLB samples from outstanding law students with the highest...

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Breach and Remedies for Breach

A contract is breached when a party, without lawful excuse, fails to perform any of his contractual obligations. Generally, liability for breach of contract is strict, and not based upon fault: the promisor undertakes to achieve a particular state of affairs, and breach is committed when performance falls short of this, even if the contract-breaker has done his best.

Temporally, breach of contract can divided into anticipatory breach and actual breach.

  • Anticipatory breach refers to the breach of a contract before the performance is due either by repudiation or impossibility.

  • Actual breach refers to the breach of a contract when performance is due by failing to perform the obligations.

In determining whether a contract can be terminated for breach, or whether the breach merely triggers a right to damages, the courts have looked at the importance of the term broken as well as the seriousness of the consequence of the breach, and this has resulted in the classification of terms of a contract as either conditions or warranties.

  • Condition: Promise, as to a fact or as to future conduct, which is regarded by the parties as an essential term, and any breach of which gives the innocent party the option of terminating the contract and claiming damages for any loss up to termination and beyond.

  • Warranty: Term which the parties do not consider essential, but as subsidiary, and the breach of that term gives rise to a claim for such damages as have been sustained by the breach of that term.

  • Intermediate/Innominate Terms: Terms which do not fall under the classification of ‘condition’ or ‘warranty’ may be seen as intermediate terms. Breach of such a term entitles the innocent party to treat the contract as repudiated only if the other party has thereby renounced his obligations or rendered them impossible of performance, in some essential respect or if the consequences of the breach are so serious as to deprive the innocent party of substantially the whole benefit which it was intended he should obtain from the contract. Otherwise, the appropriate remedy will be in damages.

1. Termination

(i) Conditions, Warranties & Innominate Terms

Sale of Goods Act 1979, ss12-15A

  • Hong Kong Fir Shipping v Kawasaki [1962] 2 QB 26: Breach of term requiring ship to be for ordinary cargo service by providing an incompetent crew and old ship which led to delay. P sought damages for wrongful repudiation by D.

    • It would be unthinkable that all of the trivial matters which could make a ship unseaworthy could all be breach of condition.

    • It is open to the parties either expressly or by necessary implication to make clear that a particular stipulation is a condition.

    • The remedies open to a party for breach of stipulation which is not a condition will depend upon that nature of the breach and its foreseeable consequences.

    • Q is: does the event deprive the party of substantially the whole benefit of the contract?

  • The Mihalis Angelos [1971] 1 QB 164: Clause of charterparty said that vessel was expected to be ready to load ‘about X date’. At that time the vessel was out on another voyage. Issue as to whether the clause was a condition.

    • Megaw LJ thinks that the clause is a condition for four inter-related reasons:

      • It tends towards certainty in the law: advantage in this where commercial contracts are concerned. Where justice does not require flexibility there is everything to be said for a degree of rigidity in principle.

      • Will rarely be injustice in holding person to be in breach of condition where he makes stipulation as to date;

      • Case law in support of notion that dates are conditions;

      • To hold that it is innominate would result in difference between charterparty and sale of goods.

  • Schuler v Wickman [1974] AC 235: D had obligation to promote and extend the sale of the products which included obligation (condition) to make certain visits to particular companies. D failed in this latter respect, but tried to rely on a clause which said 12 months notice must be given for termination, or entitled to do so where there us a material breach of obligation which has failed to remedy within 60 days (otherwise contract will remain in force), to say that those were only circumstances under which the contract could be ended.

    • If the terms of the clause are wide enough to cover breach of the earlier noted conditions then the condition must be read as subject to that which follows. Does not matter that a better draftsman would have separated things out better.

    • It appears that the clause was intended to apply to all material breaches capable of being remedied. Takes the meaning of remedy to mean an assurance that matters will be put right for the future; were in this case. To restrict scope to actually putting right that which has already gone wrong would leave it with virtually no meaning.

    • Looking at the position broadly the circumstances of this case can be remedied by ensuring that the breach doesn’t occur again.

    • Just because something is called a condition does not mean that it will be treated as such; in this case the later clause changes things.

    • Lord Wilberforce disagrees on point of construction and thinks that is a condition in this case.

    • Note that main problem was that contract badly drafted so gave the court a lot of flexibility.

  • Cehave v Bremer, The Hansa Nord [1976] QB 44: Clause in contract for sale of citrus pulp pellets said ‘shipment to be made in good condition, each shipment shall be considered a separate contract’. Rejected entire cargo because part of it was damaged. (CA)

    • Buyers were entitled to damages but could not terminate the contract as the clause had not been expressly classified as a condition nor was the court bound by authority to hold that it was a condition.

    • In absence of party stipulation and binding authority thought that had to be an innominate term.

    • Seems to have been in contemplation of the court that market fluctuations meant that termination was in...

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