Types of Term: Conditions, Warranties and the Innominate Term (OCR A-Level Law): Revision Notes
Types of Term: Conditions, Warranties and the Innominate Term
Understanding contractual terms
When parties negotiate a contract, not all statements made during discussions become part of the final agreement. Some matters remain as mere representations (pre-contractual statements), while others are incorporated as terms of the contract.
Important matters typically become terms of the contract through either:
- Express incorporation – terms explicitly agreed by the parties
- Implied incorporation – terms inserted by law or custom
Once incorporated, not all terms carry equal weight. The law recognises that some terms are more significant than others, and this classification affects the remedies available when a term is breached.
The remedy available to the injured party depends on which type of term has been breached.
The three types of term
Conditions
A condition is a term which goes to the root of the contract. It is essential to fulfilling the main purpose of the agreement.
Characteristics:
- Fundamental to the contract's purpose
- Integral to what the parties intended to achieve
- Cannot be removed without destroying the contract's basis
Breach of condition:
When a condition is broken, the injured party has the right to:
- Reject the contract entirely (treat it as ended)
- Claim damages for any losses suffered
Key Case: Poussard v Spiers and Pond (1876)
Facts: An opera singer failed to appear for the opening performances of a show, which was a significant failure.
Legal principle: The court held that appearing for opening night was a condition of the contract. The breach was so serious that it went to the heart of the agreement.
Judgment: The employers were entitled to terminate the contract and hire a replacement singer.
Warranties
A warranty is generally a descriptive term. It is secondary or supplementary to the main purpose of the contract, often described as 'ancillary' to the agreement.
Characteristics:
- Not fundamental to the contract's core purpose
- Incidental to the main agreement
- Descriptive or minor in nature
Breach of warranty:
When a warranty is breached, the injured party:
- Cannot reject the contract
- May only claim damages to compensate for loss
The contract remains valid and must be performed despite the breach.
Innominate terms
An innominate term can be either a condition or a warranty, depending on the circumstances. The classification is not determined in advance.
Characteristics:
- Neither clearly a condition nor clearly a warranty at the outset
- Flexibility allows courts to consider the actual consequences of breach
- The remedy depends on the seriousness of the breach's effects
How courts decide:
The courts examine the level of 'injury' or harm caused by the breach. If the breach causes serious consequences, the term will be treated as a condition. If the breach causes minor consequences, it will be treated as a warranty.
Key Case: Grand China Logistics v Spar Shipping (2016)
This case demonstrates the court's approach to determining whether an innominate term should be treated as a condition or warranty based on the actual impact of the breach.
Summary of remedies
The following table summarizes the key differences between the three types of terms:
| Type of term | Nature of term | Effect of breach | Remedies available |
|---|---|---|---|
| Condition | Fundamental term going to the root of the contract | Serious – strikes at the contract's heart | Right to reject contract AND claim damages |
| Warranty | Descriptive or ancillary term | Minor – does not destroy the contract's basis | Damages only (contract continues) |
| Innominate term | Flexible – depends on breach consequences | Assessed by courts case-by-case | Rejection or damages, depending on seriousness of breach |
Exam technique: identifying types of term
When answering problem questions, use this approach:
-
Ask yourself: Is the term integral or incidental to the contract?
- Integral = likely a condition
- Incidental = likely a warranty
-
Look for clues in the question:
- Terms describing the main purpose or subject matter → condition
- Terms adding extra details or specifications → warranty
- Terms with uncertain importance → innominate term
-
Consider the consequences of breach:
- Does the breach defeat the whole purpose? → condition
- Does the contract still make sense despite the breach? → warranty
Worked Example: Car Purchase
If you order a blue car to be delivered on Monday:
- Condition: The car itself (fundamental to the contract)
- Warranty: The colour blue (you still have a car, even if the wrong colour)
- Innominate term: Delivery on Monday (depends on how important timing is)
Practice scenario
Scenario: Pizza Delivery
Jill orders a takeaway from an online restaurant. She orders a spicy Mexican 10-inch pizza with chips. She orders extra jalapeños which are 'subject to availability' and to be delivered 'as soon as possible'. The pizza is delivered five hours after the order was placed, but there are no chips or extra jalapeños.
Analysis:
- Condition: The 10-inch spicy Mexican pizza – this is the main subject matter of the contract
- Warranty: The extra jalapeños (expressly stated as 'subject to availability', making them non-essential)
- Innominate term:
- The chips (could be considered part of the main order)
- Delivery 'as soon as possible' (the remedy depends on whether 5 hours is reasonable or causes serious consequences)
Key Points to Remember:
- Conditions are fundamental terms – breach allows the injured party to reject the contract and claim damages
- Warranties are minor, descriptive terms – breach only allows a claim for damages only
- Innominate terms are flexible – courts decide whether they should be treated as conditions or warranties based on the seriousness of the breach
- Poussard v Spiers and Pond (1876) established that failing to perform a fundamental obligation is a breach of condition
- Grand China Logistics v Spar Shipping (2016) illustrates the court's approach to innominate terms
- In exams, ask yourself: is the term integral (condition) or incidental (warranty) to the contract?
- The remedy available always depends on the type of term breached