innominate term hong kong fir

Traditionally, the hire payment term is regarded as an ‘innominate term’, not ‘condition’. On the facts, given that the charterer had had the "substantial benefit" of the contract for some 80% of the time period, the court held that the breach was adequately remedied by damages. For Upjohn LJ in Hong Kong Fir, the question of law was: The words "does the breach […] go to the root of the contract" and "deprive the innocent party of substantially the whole benefit of the contract" are really saying the same thing. The vessel was delivered to the charterers on 13 February 1957. Rather than classifying the terms themselves as conditions or warranties, the innominate term approach looks to the effect of the breach and questions whether the innocent party to the breach was deprived of substantially the whole benefit of the contract. Where the event occurs as a result of a breach of contract, the party in breach cannot rely upon it to relieve themselves of performance of any further undertakings. (1) The test whether the event relied upon has this consequence is the same whether the event is the result of the other party's breach of contract or not, as Mr. Justice Devlin pointed out in Universal Cargo Carriers Corporation v Citati. But the Court thought that such an approach is undesirable. The current tests for breach of innominate term, common mistake as to quality of subject-matter, and frustration of underlying purpose An initial problem is that different tests have been advocated for each doctrine and that the meaning of crucial cases such as Hong Kong Fir and Bell v Lever Brothers Ltd. [8] has been disputed. In Jackson v Union Marine Insurance there was no breach of the express warranty; but if there had been, to engraft the implied condition upon the express warranty would have been merely a more complicated way of saying that a breach of a shipowner's undertaking to sail with all possible dispatch may, but will not necessarily, give rise to an event which will deprive the charterer of substantially the whole benefit which it was intended that he should obtain from the charter. But the innocent party may, if the innocent party elects to terminate. And so it should though he has such an excuse that no action lies". The charterparty in Hong Kong Fir Shipping Co. Ltd. v Kawasaki Kisen Kaisha Ltd was a time charter of 24 months (the shipowner manages the vessel but the charterer gives orders for the employment of the vessel). This branch of the common law has reached its present stage by the normal process of historical growth, and the fallacy in Mr. Ashton Roskill's contention that a different test is applicable when the event occurs as a result of the default of one party from that applicable in cases of frustration where the event occurs as a result of the default of neither party lies, in my view, from a failure to view the cases in their historical context. The chief engineer was an alcoholic. Once it is appreciated that it is the event and not the fact that the event is a result of a breach of contract which relieves the party not in default of further performance of his obligations two consequences follow. [1978] 2 Lloyd's Rep 109 at p. 113 Lord Wilberforce spoke of the consequences of a breach of an "innominate term" hinged on the "nature and gravity" of the breach. (Hong Kong Fir Shipping Co. Ltd v Kawasaki Ltd (1962)). The Court of Appeal held that the "seaworthiness" term was not breached in a sufficiently serious way to entitle the charterer to terminate. Apply “ Hong Kong Fir ” approach: If the term breached is found not to be a condition, courts to apply “ Hong Kong Fir ” approach. Lawyers tend to speak of this classification as if it were comprehensive, partly for the historical reasons which I have already mentioned and partly "because Parliament itself adopted it in the Sale of Goods Act, 1893, as respects a number of implied terms in contracts for the sale of goods and has in that Act used the expressions "condition" and "warranty" in that meaning. University. In 1874 when the doctrine of frustration was being foaled by "impossibility of performance" out of "condition precedent" it is not surprising that the explanation given by Baron Bramwell should give full credit to the dam by suggesting that in addition to the express warranty to sail with all possible dispatch there was an implied condition precedent that the ship should arrive at the named port in time for the voyage contemplated. It gives the courts the flexibility as they can decide what are the consequences. Accordingly, it is impossible to determine ahead of time what type of term it is. It is, with all deference to Mr. Ashton Roskill's skilful argument, by no means surprising that among the many hundreds of previous cases about the shipowner's undertaking to deliver a seaworthy ship there is none where it was found profitable to discuss in the judgments the question whether that undertaking is a "condition" or a "warranty"; for the true answer, as I have already indicated, is that it is neither, but one of that large class of contractual undertakings one breach of which may have the same effect as that ascribed to a breach of "condition" under the Sale of Goods Act and a different breach of which may have only the same effect as that ascribed to a breach of "warranty" under that Act. Summary of important cases. The judge does not however refer to this type of term as "innominate" or "intermediate" anywhere in the judgment. "The distinction", he said. The fact that the emphasis in the earlier cases was upon the breach by one party to the contract of his contractual undertakings, for this was the commonest circumstance in which the question arose, tended to obscure the fact that it was really the event resulting from the breach which relieved the other party of further performance of his obligations; but the principle was applied early in the nineteenth century and without analysis to cases where the event relied upon was one brought about by a party to a contract before the time for performance of his undertakings arose but which would make it impossible to perform those obligations when the time to do so did arrive: for example, Short v Stone;[11] Ford v Tiley;[12] Bowdell v Parsons. What the learned judge had to do in the present case as in any other case where one party to a contract relies upon a breach by the other party as giving him a right to elect to rescind the contract, was to look at the events which had occurred as a result of the breach at the time at which the charterers purported to rescind the charter-party and to decide whether the occurrence of those events deprived the charterers of substantially the whole benefit which it was the intention of the parties as expressed in the charter-party that the charterers should obtain from the further performance of their own contractual undertakings. It was early recognised that contractual undertakings were of two different kinds; those collateral to the main purpose of the parties as expressed in the contract and those that were mutually dependent so that the non-performance of an undertaking of this class was an event that excused the other party from the performance of his corresponding undertakings. The classification of terms is fundamental in contract law as it affects the legal rights of a party in the event of a breach of contract. The test whether an event has this effect or not has been stated in a number of metaphors all of which I think amount to the same things Does the occurrence of the event deprive the party who has further undertakings still to perform of substantially the whole benefit which it was the intention of the parties as expressed in the contract that he should obtain as the consideration for performing those undertakings? The chief engineer was an … Clause 13, the "due diligence" clause, which exempts the shipowners from responsibility for delay or loss or damage to goods on board due to unseaworthiness unless such delay or loss or damage has been caused by want of due diligence of the owners in making the vessel seaworthy and fitted for the voyage, is in itself sufficient to show that the mere occurrence of the events that the vessel was in some respect unseaworthy when tendered or that such unseaworthiness had caused some delay in performance of the charter-party would not deprive the charterer of the whole benefit which it was the intention of the parties he should obtain from the performance of his obligations under the contract - for he undertakes to continue to perform his obligations notwithstanding the occurrence of such events if they fall short of frustration of the contract and even deprives himself of any remedy in damages unless such events are the consequence of want of due diligence on the part of the shipowner. It embraces obligations with respect to every part of the hull and machinery, stores and equipment and the crew itself. The innominate term approach was established in the case of Hong Kong Fir Shipping. Lord Diplock, in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd, [7] created the concept of an innominate term, breach of which may or may not go to the root of the contract depending upon the nature of the breach. In the case, Diplock LJ set out that test for repudiatory breach and made it clear that the application of the test depended on the judge's evaluation of all the relevant circumstances. It was to sail in ballast from Liverpool to collect a cargo at Newport News, Virginia, and then to proceed via Panama to Osaka. It can be broken by the presence of trivial defects easily and rapidly remediable as well as by defects which must inevitably result in a total loss of the vessel. The question which the learned judge had to ask himself was, as he rightly decided, whether or not at the date when the charterers purported to rescind the contract, namely 6th June, 1957, or when the shipowners purported to accept such rescission, namely 8th August, 1957, the delay which had already occurred as a result of the incompetence of the engine room staff, and the delay which was likely to occur in repairing the engines of the vessel and the conduct of the shipowners "by that date in taking steps to remedy these two matters, were, when taken together, such as to deprive the charterers of substantially the whole benefit which it was the intention of the parties they should obtain from further use of the vessel under the charter-party. Innominate or intermediate terms are terms which can be broken with important or trivial consequences, depending on the nature of the breach. Since Bunge v Tradax[2] in the House of Lords, the description "innominate term" has been in regular use. In Bremer Handelsgesellschaft Schaft m.b.h. The charterpartyin Hong Kong Fir Shipping Co. Ltd. v Kawasaki Kisen Kaisha Ltd was a time charter of 24 months (the shipowner manages the vessel but the charterer gives orders for the employment of the vessel). However the crew were both insufficient in number and incompetent to maintain her old-fashioned machinery; and the chief engineer was a drunkard. In the nomenclature of the eighteenth and early nineteenth centuries undertakings of the latter class were called "conditions precedent" and a plaintiff under the rules of pleading had to aver specially in his declaration his performance or readiness and willingness to perform all those contractual undertakings on his part that constituted conditions precedent to the defendant's undertaking for non-performance of which the action was brought. Only where this is answered affirmatively is it to be a breach of condition. The breaches did not go to the root of the contract - they weren't serious enough. The test for repudiatory breach (of an innominate term), Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd, https://en.wikipedia.org/w/index.php?title=Innominate_term&oldid=989359992, Creative Commons Attribution-ShareAlike License, This page was last edited on 18 November 2020, at 15:14. Hong Kong Fir Shipping hired out their elderly ship,[4] the "Hong Kong Fir", under a two-year time charter-party to Kawasaki Kisen Kaisha. v Vanden Avenne Izegem p.v.b.a. Innominate terms of contracts are one of the three categories of terms of contract, the others being warranties and conditions. It was an "innominate term". 2019/2020. Somewhat unsurprisingly therefore, in terms of an agreement, it is critical for the parties to appreciate and understand which of their terms are conditions and those which are agreed to be warranties, since in the event of a breach correctly … However, the trial judge found that this breach was not substantial enough to entitle the charterer to repudiate the contract. Innominate term. Case List for Carriage II. B Termination for Serious Breach of an Intermediate Term: The Hong Kong Fir Doctrine Some terms are not easy to characterise, ex ante, as either conditions or warranties. The idea of innominate terms was introduced in Hong Kong Fir. The case is that it establishes the legal test applied to decide whether a party to a contract is in repudiatory breach of contract, or not. This was followed in the case of The Mihalis Angelos (1971 1 QB 174). The Court of Appeal reversed the decision and the buyers appealed to the House of Lords. And the Marine Insurance Act 1906 s 39(4) provides that "a ship is deemed to be seaworthy when she is reasonably fit in all respects to encounter the ordinary perils of the adventure insured.". In English contract law, an innominate term is an intermediate term which cannot be defined as either a "condition" or a "warranty".[1]. The problem was the delay element; one had to "wait and see" the effect of the breach. In the earliest cases such as Pordage v Cole[8] and Thorpe v Thorpe[9] the question whether an undertaking was a condition precedent appears to have turned upon the verbal niceties of the particular phrases used in the written contract and it was not until 1773 that Lord Mansfield, in the case, which is a legal landmark, Boone v Eyre,[10] swept away these arid technicalities. The charterers also said that they were entitled to terminate the charter because of the failures by the shipowners to remedy breaches (a) within a reasonable time, and/or (b) so as to frustrate the purpose of the charter. The test pronounced by Diplock LJ in Hong Kong Fir remains the law in England and Wales. On the voyage to deliver … Hong Kong responded that Kawasaki were now the party in breach for wrongfully repudiating the contract. By this time, barely seventeen months of the two-year time-charter remained. "which hold that, where the shipowner has not merely broken his contract, but has so broken it that the condition precedent is not performed, the charterer is discharged. [14] (2) The question whether an event which is the result of the other party's breach of contract has this consequence cannot be answered by treating all contractual undertakings as falling into one of two separate categories: "conditions" the breach of which gives rise to an event which relieves the party not in default of further performance of his obligations, and "warranties" the breach of which does not give rise to such an event. The vessel was delivered to the charterers on 13 February 1957. or innominate term. In some classes of contracts such as sale of goods, marine insurance, contracts of affreightment evidenced by bills of lading and those between parties to tills of exchange, Parliament has defined by statute some of the events not provided for expressly in individual contracts of that class; but where an event occurs the occurrence of which neither the parties nor Parliament have expressly stated will discharge one of the parties from further performance of his undertakings it is for the court to determine whether the event has this effect or not. However, just because the Hongkong Fir Soon after, in The Mihalis Angelos [1971] 1 QB 164, it was held the impossibility of the shipowner to meet the "expected ready to load" date, ipso facto entitled the charterer to repudiate for anticipatory breach of condition. The ship’s age meant that it needed to be maintained by skilled and experienced engine room staff en route to Osaka. In Hong Kong Fir the English Court of Appeal introduced a new category to the traditional taxonomy. Other phrases expressing the same idea were used by other judges in the cases which have already been cited by Lord Justice Sellers, and I would only add to his comments upon them that when it is borne in mind that until the latter half of the nineteenth century the only event that could be relied upon to excuse performance by one party of his undertakings was a default by the other party no importance can be attached to the fact that in occasional cases, and there may be others besides Freeman v. Taylor (1831) 8 Bingham page 124 , the Court has referred to the object or purpose of the party not in default rather than to the object or purpose of the contract, for the relevant object or purpose of the party not in default is that upon which there has been a consensus ad idem of both parties as expressed in the words which they have used in their contract construed in the light of the surrounding circumstances. Ship owners let the vessel, Hongkong fir, to charterers for a period of 24 months. Ravi engaged MIcrohard Company Pte Ltd to perform professional software support service for his customers relationship management software, We will assess whether MicroHard Company Pte Ltd has satisfy the terms of agreement, if not, we will do discussion about the question whether Ravi can get any compensation in incidents (a), (b) an… 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. Rather than classifying the term, if the party was substantially deprived then the contract may come to an end. Innominate Terms: As established in Hong Kong Fir Shipping, the innominate term approach looks at the effect of the breach of contract and whether or not the innocent party was deprived of the whole benefit of the contract. The charter used the ship to carry coal from Virginia in the United States to Osaka, Japan. In that case, the shipowner hired a ship to the charterer for 24 months. The engine room staff were inadequate in number. Accordingly, the charterers were not entitled to terminate the contract. For instance, to take Baron Bramwell's example in Jackson v. Union Marine Insurance itself (at page 142), breach of an undertaking by a shipowner to sail with all possible dispatch to a named port does not necessarily relieve the charterer of further performance of his obligation under the charter-party, but if the breach is so prolonged that the contemplated voyage is frustrated it does have this effect. Both under the common law and under the Hague-Visby Rules, the term "seaworthiness" covers not just the ship itself, but its crew, its provisions and equipment, and its suitability for both the cargo and the voyage. [2] In this case, Diplock LJ proposed that some terms could lead either to the right to terminate a contract as a remedy, or to the mere entitlement to damages (without a right to terminate). The existence of innominate terms was acknowledged in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7 (20 December 1961). Facts. Consequently the problem in this case is, in my view, neither solved nor soluble by debating whether the shipowner's express or implied undertaking to tender a seaworthy ship is a "condition" or a "warranty". On the voyage from Liverpool to Osaka, the engines suffered several breakdowns, and was off-hire for a total of five weeks, undergoing repairs. Hongkong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd., the Hongkong Fir (1961) Charles Mitchell and Paul Mitchell (eds), Landmark Cases in the Law of Contract (Hart 2008) 269-297 31 … Under the English sale of goods principles, a condition is a term whose breach entitles the injured party to repudiate the contract,[1] but a breach of warranty shall give rise only to damages. Once in Osaka, market freight rates fell, and Kawasaki terminated the contract citing Hong Kong's breach. The innominate term approach was established in the case of Hong Kong Fir Shipping. However, modern commercial custom has since established that some breaches, such as failure to meet a "notice of readiness to load" a sea cargo, will always be repudiatory.[3]. In Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (1962 2 QB 26) the Court of Appeal of England and Wales first conceived the notion of an "innominate term". On arrival at Osaka, a further fifteen weeks of repairs were needed before the ship was seaworthy again. In Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (1962 2 QB 26) the Court of Appeal of England and Wales first conceived the notion of an "innominate term". But it is by no means true of contractual undertakings in general at common law. There are, however, many contractual undertakings of a. more complex character which cannot be categorised as being "conditions" or "warranties" if the late nineteenth century meaning adopted in the Sale of Goods Act, 1893, and used by Lord Justice Bowen in Bensen v Taylor Sons & Co[15] be given to those terms. 5 minutes know interesting legal matters Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 (UK Caselaw) ... Innominate Terms: The Case of Hong Kong Fir … A term in the charterparty agreement required the ship to be seaworthy and to be "in every way fitted for ordinary cargo service." The grounds relied on by the charterers (ie the hirers of the ship) to attempt to terminate included breaches of obligations of the shipowners to: (1) deliver a seaworthy vessel; (2) maintain the vessel properly; and (3) deliver a ship capable of a specified minimum speed. But not arriving in time for the voyage contemplated, but at such a time that it is frustrated is not only a breach of contract, but discharges the charterer. The key issue is turn upon whether MicroHard Company Pte Ltd has breached any term in the Software Support Services Agreement it had signed with Ravi (the Customer). Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7 is a landmark English contract law case. In Hong Kong Fir Shipping case, Dplock LJ made it clear that the division into conditions and warranties was not complete but had to be supplemented by the innominate term. The second issue was the food poising of the guests due to poorly cooked chicken. - The category of innominate terms was created in Hong Kong Fir Shipping. The common law evolves not merely by breeding new principles but also, when they are fully grown, by burying their ancestors. Hong Kong Fir Shipping Ltd v Kisen Kaisha Ltd (1962) EWCA Civ 7. This too was a judgment on demurrer but the principle was the same when the substance of the matter was in issue. Rather than classifying the terms themselves as conditions or warranties, the innominate term approach looks to the effect of the breach and questions whether the innocent party to the breach was deprived of substantially the whole benefit of the contract. What mattered was not whether a particular contract term was called a "warranty" or a "condition", but how serious was the breach of the term. That significance of that test is that when a party is in repudiatory breach of a contract, the innocent party is entitled to terminate the contract. As my "brethren have already pointed out, the shipowner's undertaking to tender a seaworthy ship has, as a result of numerous decisions as to what can amount to "unseaworthiness", become one of the most complex of contractual undertakings. The employer’s ability to terminate the contract on breach will therefore depend on the effect of the breach, in accordance with Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha [1962] 2 QB 26, CA. So too there may be other simple contractual undertakings of which it can be predicated that no breach can give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract; and such a stipulation, unless the parties have agreed that breach of it shall entitle the non-defaulting party to treat the contract as repudiated, is a "warranty". As the Hongkong Fir decision has been adopted in all major Commonwealth jurisdictions, it is a decision which the Court of Appeal felt it should continue to endorse. For this reason, innominate terms could be called "wait and see" terms of contracts – one needs to wait and see the consequence of the breach to ascertain whether the initial act which was a breach of the contract was sufficiently serious to amount to a repudiatory breach of contract. It introduced the concept of innominate terms, a category between "warranties" and "conditions". The Hong Kong Fir decision was met with some alarm in the shipping world, where certainty is crucial. The Court found upon consideration of all the circumstances that they were "not deprived of substantially the whole of the benefit of the charter". The problems in what event will a party to a contract be relieved of his undertaking to do that which he has agreed to do but has not yet done? "is very clear. Breach of these terms, as … Thus, the type of breach must be determined by the judges. Course. Breach of an innominate term therefore depends entirely upon the nature of the breach and its foreseeable consequences. White and Carter (Councils) Ltd v McGregor, "a 25-year-old vessel called the "Antrim", which they renamed the "Hong Kong Fir", of some 5395 tons gross and 3145 tons net register", Law Reform (Frustrated Contracts) Act 1943, Universal Cargo Carriers Corporation v Citati, Maredelanto Compania Naviera SA v Bergbau-Handel GmbH, L Schuler AG v Wickman Machine Tool Sales Ltd, Golden Strait Corporation v Nippon Yusen Kubishka Kaisha, https://en.wikipedia.org/w/index.php?title=Hong_Kong_Fir_Shipping_Co_Ltd_v_Kawasaki_Kisen_Kaisha_Ltd&oldid=983505504, Court of Appeal (England and Wales) cases, Creative Commons Attribution-ShareAlike License, [1962] 2 QB 26, [1961] EWCA Civ 7, [1962] 1 All ER 474, This page was last edited on 14 October 2020, at 16:34. Refer to this type of term as `` innominate term repudiatory breach of an innominate.. 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Number and incompetent to maintain her old-fashioned machinery ; and the buyers appealed to the charterers 13... Is of little relative importance action lies '' on both sides they are fully grown, by burying their.! And innominate terms Civ 7 is a landmark English contract law case terms of contract certainty crucial... In finding the condition and they rejected to apply the case of Kong! Poorly cooked chicken others being warranties and innominate terms, a warranty fully grown, by burying their ancestors a. Virginia in the case of the contract all terms are readily/sensibly identified as being either a condition or.. The hire payment term is regarded as an ‘ innominate term '' has been in use! En route to Osaka the charter used the ship was seaworthy again the agreement included a term the! To root of contract, the Hongkong Fir, to charterers for a period of months! Old-Fashioned machinery ; and the buyers appealed to the charterers on 13 February 1957 the subject of a only. 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