Explaining the contents of a contract: what are the different categories of contractual terms?
There are three categories of contractual terms: conditions, warranties, and innominate terms.1. Conditions: A condition is a term that, when breached, would deprive the innocent party of substantially the whole benefit intended he should obtain under the contract (as stated in Hong Kong Fir Shipping Co). Breach of a condition entitles the innocent party to repudiate the contract and/or claim damages (Poussard v Spiers).2. Warranties: A warranty is a term that, when breached, would not substantially deprive the innocent party of the whole benefit intended he should obtain under the contract (Hong Kong Fir Shipping Co v Kawasaki). Breach of a warranty entitles the innocent party to claim damages, not to repudiate the contract or to be discharged from performance (Bettini v Gye)3. Innominate Terms: An intermediate or innominate term is a term for which the Court considers the consequences of the breach on the innocent party before determining whether the term is in fact a condition or a warranty (Hong Kong Fir Shipping Co).
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