Contractual terms

A contractual term is "Any provision forming part of a contract". Each term gives rise to a contractual obligation, breach of which can give rise to litigation. Not all terms are stated expressly and some terms carry less legal gravity as they are peripheral to the objectives of the contract.

Conditions are terms that go to the very root of a contract. Breach of a condition will entitle the innocent party to terminate the contract. A warranty is less imperative than a condition, so the contract will survive a breach. Breach of either a condition or a warranty will give rise to damages.

It is an objective matter of fact whether a term goes to the root of a contract. By way of illustration, an actress's obligation to perform the opening night of a theatrical production is a condition, whereas a singer's obligation to perform during the first three days of rehearsal is a warranty.

Statute may also declare a term or nature of term to be a condition or warranty. For example, the Sale of Goods Act 1979 (UK) s15A provides that terms as to title, description, quality, and sample (as described in the Act) are conditions save in certain defined circumstances.

Lord Diplock, in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd, created the concept of an innominate term, breach of which may or may not go to the root of the contract depending upon the nature of the breach. Breach of these terms, as with all terms, will give rise to damages. Whether or not it repudiates the contract depends upon whether legal benefit of the contract has been removed from the innocent party. Megaw LJ, in 1970, preferred the use of the classic categorizing into condition or warranty due to legal certainty. This was interpreted by the House of Lords as merely restricting its application in Reardon Smith Line Ltd. v Hansen-Tangen.

In general, parties can only sue for enforcement of valid contractual terms as opposed to representations or mere puffs.

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