The court also took into account that the contract itself was based upon an industry standard form, yet the term was not expressed to be a condition. The Court viewed that, had the industry and parties wished to make the position plain, they could have used the language of a condition yet chose not to. Additionally, the breached obligation was itself a part of a wider contract term, which was not itself a condition of the lease and would be an unusual place to include a condition.
On the facts, the breach had resulted in no adverse consequences to Silverburn. This case provides useful guidance when considering how to express the weighting of critical terms and on the considerations the courts will use to classify terms should a dispute arise. If a point is critical to your business and you want a term to be a condition with the accompanying potentially severe consequences then it is best to ensure certainty by clearly expressing the term as such.
ON [4] in which a textual approach that gave emphasis to the normal and ordinary meaning of the words used was emphasised. Both parties agree that the term should be a condition.
The nature of the contract or the actions of the parties suggest that both parties expect for the term to be a condition. Case law shows that the term is a condition. If a condition is breached, the aggrieved party can do one of two things: End the contract and sue for damages. Continue with the contract, sue for damages, and seek other resolutions.
Warranties A warranty in a contract is considered to be less important than a condition. Innominate Terms If it is breached, an innominate term could have a wide range of consequences. A breach of contract can be ruled serious or minor following several tests, including: If the innocent party is stripped of the entire benefit of the contract.
If the breach hits the most important aspects of the contract. In order to make these decisions, courts or arbitrators look at a number of factors, including: Amount of damages caused to the innocent party.
Time lost for the innocent party. Value of the action to the innocent party. Cost for the innocent party to remedy the situation. If the breaching party made an effort to fix the situation. If there have been breaches before. If it is likely breaches will occur in the future. If compensation will be reasonable. Was this document helpful? Share it with your network! Transferring contracts and rights of third parties.
Sign-in Help. Contract interpretation—conditions, warranties and intermediate terms Contract interpretation—conditions, warranties and intermediate terms Practice notes. The following Dispute Resolution practice note provides comprehensive and up to date legal information covering: Contract interpretation—conditions, warranties and intermediate terms What is classification of terms and why is it important?
How do you arrive at the correct classification? Warranties in a contract Intermediate or innominate terms in a contract Less Access this content for free with a trial of LexisPSL and benefit from: Instant clarification on points of law Smart search Workflow tools 36 practice areas.
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