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Hong Kong Fir Shipping v Kawasaki Kisen Kaisha [1962] 2 QB 26 Court of Appeal A ship was chartered to the defendants

for a 2 year period. The agreement included a term that the ship would be seaworthy throughout the period of hire. The problems developed with the engine of the ship and the engine crew were incompetent. Consequently the ship was out of service for a 5 week period and then a further 15 week period. The defendants treated this as a breach of condition and ended the contract. The claimants brought an action for wrongful repudiation arguing the term relating to seaworthiness was not a condition of the contract. Held: The defendants were liable for wrongful repudiation. The court introduced the innominate term approach. Rather than seeking to classify the term itself as a condition or warranty, the court should look to the effect of the breach and ask if the breach has substantially deprived the innocent party of the whole benefit of the contract. Only where this is answered affirmatively is it to be a breach of condition. 20 weeks out of a 2 year contract period did not substantially deprive the defendants of whole benefit and therefore they were not entitled to repudiate the contract.

Cehave NV v Bremer Handelsgesellschaft mbH, [1976] 1 QB 44 Facts: Citrus pellets. Some of shipment was not good. D rejected all goods. P refused to take them back. Later X came along and bought them from storage place and then sold them to D for lower price. D used pellets just the same as we have if he bought them from P. Issue(s): Can the buyers reject the good? Ratio: If a condition is breached the buyer is entitled to reject the goods (treat contract at an end), but if it is an intermediate stipulation (intermediate terms) that was breached the buyer cannot reject the unless breach goes to the root of the contract. TEST to determine if allowed to treat contract as brought to an end: does the effect of the breach (consequences) deprive you substantially of the benefit expected to receive out of the contract? Analysis: You must look at the consequence of the breach to determine if it is an action for rejection of the good or a right to sue for damages arises. Breaches going to the root. If the breach went to the root of the matter, the stipulation was to be considered a condition precedent: but if the breach did not go to the root, the stipulation was considered to be an independent covenant which could be compensated for in damages. 1st see whether it is a condition in its true sense If not a condition, then look to the extent of the breach If goes to root on K then other party is considered discharged

You cannot tell at the outset looking at the term whether the consequence of the breach should be rejection of the goods or damage You must wait and look at the consequence of the breach

Bunge Corporation v Tradax [1981] 1 WLR 711 House of Lords A contract for the sale 5,000 tons of soya beans required the buyers to give the sellers 15 days notice of readiness of loading. This term was stated as a condition. The buyers gave a shorter notice period and the sellers treated this as terminating the contract and claimed damages. The price of soya beans had dropped by over $60 per ton. The initial hearing was decide by arbitration where it was held that the sellers were entitled to end the contract and awarded $317.500 representing the decrease in value of the soya beans. The buyers appealed to the High court who reversed this decision applying the innominate term approach from Hong Kong Fir. The Court of Appeal reversed the decision and the buyers appealed to the House of Lords. Held: the term was stated as a condition and should be treated as such. The need for certainty in commercial contracts and the fact that the innominate term approach had caused much litigation meant that it should only be used where it was impossible to classify the term as a condition or warranty by reference to the term itself.