Classification of terms
Effect of breach = innocent party has right of election - either...
To affirm (continue) the contract AND claim damages, OR
To terminate the contract and claim damages
Effect of breach = innocent party only has right to claim damages, not terminate - contract continues
Classification by statute
Sale of Goods Act 1979 - all implied terms are conditions UNLESS s15A applies
s12 - title - s12(5A)
s13 - description - s13(1A)
s14 - satisfactory quality/fitness for purpose - s14(6)
s15 - sample - s15(3)
s15A SOGA 1979
Arcos v Ronaasen (1933) - party terminated a contract for a minor breach of the implied term that goods must match their description - s13 SOGA
Atkin LJ: "A ton does not mean about a ton, or a yard about a yard. Still less when you descend to minute measurements. Does 1/2 inch mean about 1/2 inch? If the seller wants a margin he must and in my experience does stipulate for it."
Remedied by s15A SOGA - if such SLIGHT breach of ss13, 14, or 15 of the SOGA that...
Rejection of goods would be unreasonable
Breach may be treated as a breach of warranty
Sale of Goods & Services Act 1982 - doesn't class its implied terms - generally accepted position is that s13 (reasonable care and skill) is an innominate term
Classification by the parties
Courts usually give effect to parties' intention - Lombard North Central v Butterworths (1987)
But not always - Schuler v Wickman (1974), per Lord Reid
"Use of the word 'condition' is an indication - even a strong indication - [of the parties' intention] but it is by no means conclusive...
The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result the more unlikely it is that the parties can have intended it..."
Test - do the consequences of the breach deprive the innocent party of substantially the whole benefit of the contract? - Hong Kong Fir v Kawasaki Kisen Kaishi
If yes - treat the breach as a breach of condition
If no - treat the breach as a breach of warranty
Definition: "one which can be broken in so many different ways and with such varying consequences that the parties cannot be taken to have intended that any breach shall entitle the innocent party to terminate the whole contract" - Hale J in Rice v Great Yarmouth BC (2003)
Distinguishing conditions and warranties
Test - does the term go "to the root of the contract"?
Blackburn J in Bettini: "Whether the particular stipulation goes to the root of the matter, so that a failure to perform it would render the performance of the rest of the contract by the plaintiff a thing different in substance from what the defendant has stipulated for; or whether it merely partially affects it and may be compensated for in damages."
Warranties - Bettini v Gye (1876)
Conditions - Poussard v Spiers (1876)
Precedents which have established certain terms as conditions - shipping/transportation industry
Expected readiness to load - The Milhalis Angelos (1971)
Time of performance - Bunge v Tradox (1981)