Termination (cases and principles)

The Hongkong Fir

re seaworthiness of a ship

establishes existence of innominate terms (neither conditions nor warranties until the term is breached - the classified depending on seriousness and whether it deprives the innocent party of the whole benefit of the contract)

breaches that have varying levels of seriousness making it impossible to ascribe the term in advance as a condition.

in this case the term was not sufficiently breached as to entitle to repudiation.

Arcos v Ronaasen

sale of wood that breached the term regarding the thickness of the plants whilst remaining of merchantable quality for the intended purpose

specification of goods = a condition, even when concerning small deviations that do not undermine fitness for purpose.

Schuler v Wickman

car selling part that had strict terms regarding visits to car dealers.

many non-legal uses of the words condition that would not occur to a layman

purpose of conditions can be because it goes to the fundamental nature, other times to stress otherwise not apparent importance.

the word ‘condition’ itself is indicative rather than conclusive

must fit construction and the more unreasonable the result the more unlikely it is that the parties could have intended it

The Hansa Nord

sale of pulp pellets, a portion of which were not in line with the clause ‘shipment to be made in good condition’

found that this was not a condition therefore entitled to damages rather than termination

considers the history of whether such a clause is usually treated like a condition and whether it deprives them of the whole of the benefit of the contract

courts will not readily construe terms as conditions lest it discourages performance and encourages avoidance of contractual obligations

Bunge Corp v Tradax

parties intentions relevant to whether a term is a condition, warranty, or innominate term

time clauses are typically conditions as time is of the essence to commercial parties

late notice regarding shipment of soy products - found entitled to repudiate because the clause was found to be a condition.

innominate terms operate as either conditions or warranties

courts should not be reluctant to hold that an obligation has the force of a condition if it its evident from the parties’ intentions

Hochster v De La Tour

cancels the companionship in europe

sets the rule for anticipatory breach where allowed to bring an action regarding a future obligation without having to wait for that date to pass.

more rational for the innocent party to have the liberty to consider himself absolved from the duties

Johnson v Agnew

refusal to complete sale of farm and did not comply to specific performance. defendant argued that could not sue for breach when had already elected to seek specific performance.

termination is prospective ie absolves only future obligations not those that have passed

obtaining an order for specific performance does not forfeit right to terminate/sue for breach.

date of assessment not necessarily fixed at date of breach - date when it better reflects the claimant’s losses.

Photo Production v Securicor

on rescission, primary obligations come to an end and secondary obligations arise including compensation.

Gets v Societe General London Branch

English law does not permit the ‘automatic termination’ of the contract

under elective theory it is for the innocent party to judge whether it is in his interests to keep the contract alive. Manifest justice favours preferring the interests of the innocent party to those of the wrongdoer.

dispute over termination payments.

Lombard North Central v Butterworth

When the breach is trivial its not necessarily possible to say you've cost me the bargain  → therefore termination only applies to breach of condition, lack of substantial performance, and anticipatory breach.

re late payments for lease of equipment

Sumpter v Hedges

failure to complete buildings on land.

where a contract is only partially performed the party in breach cannot claim for the partial performance unless a new contract may be inferred

the courts will look at whether the innocent party had the option not to accept the partial performance e.g. landowner cannot be expected to leave buildings in an incomplete state.

cannot recover quantum meruit