There are certain types of terms that the law classify as conditions. For example the Sale of Good Act describe certain terms as conditions and it should never be breached. For example, goods must always match the description, always be of staidfactory quality, good bought in bulk must fit the sample. It should follow that in the event of a breach, a buyer should be able to rescind the contract. This protects the buyers from malicious sellers that have an unfair bargaining position over them
In the case of Mihalis Angelos, the owner of a ship hired it out to a charterparty. The document contained the clause expected ready to load under this charter on 1 July, in fact it was not ready untoml 23 July. The clause ‘expected readiness’ was a condition and breach of the clause entitled the parties to rescind the contract irrespective of the consequences of the breach. The judgebased his decision on the fact that in charterparties, similar undertakings were construed as conditions and in commercial transactions, made by companies with equal bargaining power, certainty is regarded as utmost importance as the parties would need to know the terms before they can confidently agree to it.
Another term is a warranty. A warranty is not an essential terms of the contract but merely supplements the conditions. The Sale of Goods Act regards it as ‘collateral to the main purpose(of contract of sale). The breach of this only bring about light consequences and the innocent party can sue for damages and not rescind the contract.
In Bettini v Gye, the plaintiff was an opera singer who was sacked because he missed 6 days of reheasals. This is held to be a mere warranty, hence the employer had no right to sack him, but only to claim damages.
When there is a need for courts to determine the status of terms, the Sale of Goods Act 1979 will act as a guideline by labeling terms as either conditions or warranties. When a term is not labeled, the court would determine whetehr it amounts to a condition or warranty based on the importance of the terms.
