OCR A2 Law - The Law of Contract - The Importance of 'Classifying Terms' (3)

AO2: This approach has gained much popularity amongst judges... CASE: "Reardon Smith v Hansen-Tangen". In this case there was a contract to build a ship (the OSAKA-354) to be built in the Osaka shipyard. The yard was full and was built to the same spec but in the OSHIMA shipyard. HELD: The buyer couldn't repudiate as this was not a major breach.

Repudiation for an Innominate term: Parties can only repudiate an innominate term only if you have been 'substantially deprived' of the whole contract. AO2: It brings a level of uncertainty to the law as parties are unaware of their remedy until the breach occurs. However, the approach is fair especially where a party tries to take advantage over another by describing all their tems as conditions. Even though this approach is used widely conditions and warranties are stilll needed in a contract. How Judges classify terms (guiding principles): Usually if parties have stated terms as conditions or warranties, judges will give effect to them. Unless a party tries to take advantage by calling all terms, conditions.CASE: "Schuler v Wickman". In this case there was a 4-year contract made to make weekly visits to 6 large motor manufacturers. The defendant failed to attend for 1 week. HELD: The claimant couldn't repudiate as it was unfair to call of the contract. If terms aren't classified the judges will classify them, ususally as an innominate term as it allows them to use their discretion. If terms are classified by statute, then judges will follow the statute e.g. S12/13/15 of Sales of Goods Act - described as conditions and S14 is an innominate term.AO2: Innominate term approach is fair but conditions and warranties still needed as it makes good business sense and they may want to state them as conditions.