Terms of The Contract Cases | Contract Law

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Cases On Terms Of The Contract


Burgess v Wickham (1836) B&S 669

It was held that a person who takes out a policy of marine insurance can show

that the insurer knew the ship to be unseaworthy, and so negative the usual

implied warranty of seaworthiness.

Pym v Campbell (1856) 6 E&B 370

A written agreement for the sale of a patent was drawn up, and evidence was

admitted of an oral stipulation that the agreement should not become operative

until a third party had approved of the invention.

City & Westminster Properties v Mudd [1959] Ch 129

The defendant, who had been a tenant of the premises for six years, had

resided at the shop. When the lease fell for renewal, the plaintiffs inserted a

clause for use of the premises to be for business purposes only. The defendant

asked if he could sleep there, was told that he could and he signed the lease.

Even though this assurance contradicted the lease, evidence of it was held

admissible to prove a collateral contract which the tenant could plead in answer

to a claim for breach of contract.


Routledge v McKay [1954] 1 WLR 615

The defendant stated that a motor cycle, the subject matter of the proposed

sale, was a 1942 model. In the written contract, signed a week later, no mention

was made of the date of the model. The lapse of a week between the two events

weighed with the court as a factor militating against construing the statement

as a contractual term. (See further below)

Schawel v Reade [1913] 2 IR 64

The defendant told the plaintiff, who required a horse for stud purposes,

that the animal was ‘perfectly sound’. A few days later the price was agreed

and, three weeks later, the plaintiff bought the horse. The statement was held

to be a term of the contract, but here the defendant, who was the owner of the

horse, would appear to have had special knowledge.

Bannerman v White (1861) CB(NS) 844

The buyer of hops asked whether sulphur had been used in their cultivation.

He added that if it had he would not even bother to ask the price. The seller

assured him that it had not. This assurance was held to be a condition of the

contract. It was of such importance that, without it, the buyer would not have


Routledge v McKay [1954]

In the written contract, signed a week later, no mention was made of the date

of the model. It was held, on this point, that what the parties intended to

agree on was recorded in the written agreement, and that it would be

inconsistent with the written agreement to hold that there was an intention to

make the prior statement a contractual term.

Birch v Paramount Estates (1956) 167 EG 196

The defendants made a statement about the quality of a house. The contract,

when reduced to writing, made no reference to the statement. The Court of Appeal

regarded the statement as a contractual term. But here the defendants had

special knowledge.

Harling v Eddy [1951] 2 KB 739

The vendors of a heifer represented that there was nothing wrong with the

animal but, in fact, it had tuberculosis from which it died within three months

of the sale. A contributory factor leading the Court of Appeal to decide that

the statement was a term of the contract was that the vendors were in a special

position to know of the heifer’s condition.


Poussard v Spiers (1876) 1 QBD 410

Poussard was engaged to appear in an operetta from the start of its London

run for three months. The plaintiff fell ill and the producers were forced to

engage a substitute. A week later Poussard recovered and offered to take her

place, but the defendants refused to take her back.

The court held that the defendant’s refusal was justified and that they were

not liable in damages. What chiefly influenced the court was that Poussard’s

illness was a serious one of uncertain duration and the defendants could not put

off the opening night until she recovered. The obligation to perform from the

first night was a condition of the contract. Failure to carry out this term

entitled the producers to repudiate Poussard’s contract.

Bettini v Gye (1876) 1 QBD 183

Bettini, an opera singer, was engaged by Gye to appear in a season of

concerts. He undertook to be in London at least six days before the first

concert for the purpose of rehearsals. He arrived three days late because of a

temporary illness. He gave no advance notice and Gye refused to accept his


It was held that the plaintiff had been engaged to perform for a 15-week

season and the failure to attend rehearsals could only affect a small part of

this period. The promise to appear for rehearsals was a less important term of

the contract. The defendant could claim compensation for a breach of warranty

but he could not repudiate Bettini’s contract.

The Mihalis Angelos [1971] 1 QB 164

The owners of a ship let it to charterers, undertaking that the ship would be

expected ready to load about 1 July, would proceed to a certain port for the

loading of cargo, and that the charterer would have the option of cancelling the

charter if the ship was not ready to load by July 20. The charterer was unable

to get a cargo by July 17 and cancelled the charter, alleging that it was

frustrated. The ship itself was not ready until July 23. At trial it was argued

that the charterer was entitled to avoid the contract on July 17 because of a

breach of contract by the shipowner, ie he had impliedly promised that he had

reasonable grounds for believing that the ship would be ready to load on July 1,

and that there were no such grounds. The trial judge held that there was a

breach of this term, but the term was not a condition and the breach was not so

fundamental as to give the right to terminate the contract.

The Court of Appeal held that the term was a condition and that the charterer

had properly avoided the contract even though he had done so on the ground that

the contract was frustrated when this was not the case. Lord Denning stated that

“The fact that a contracting party gives a bad reason for determining it

does not prevent him from afterwards relying on a good reason when he discovers

it.” Megaw LJ, discussing the term “expected ready to load… ”


“… such a term in a charterparty ought to be regarded as being a

condition of the contract, in the old sense of the word “condition”;

that is that when it has been broken, the other party can, if he wishes, by

intimation to the party in breach, elect to be released from performance of his

further obligations under the contract; and he can validly do so without having

to establish that, on the facts of the particular case, the breach has produced

serious consequences which can be treated as “going to the root of the

contract” or as being “fundamental,” or whatever other metaphor

may be thought appropriate for a frustration case.”

The Hansa Nord [1976] QB 44

Citrus pulp pellets for use in animal food had been sold for £100,000 under

a contract which provided for “shipment to be made in good condition.”

Part of the goods had not been so shipped and in addition the market value in

such goods had fallen at the delivery date. The buyers rejected the goods which

were later resold pursuant to a court order and eventually reacquired by the

original buyers for just under £34,000. The buyers then used the goods for the

originally intended purpose of making cattle food, though the defective part of

the goods yielded a slightly lower extraction rate than sound goods would have


The Court of Appeal held that rejection was not justified. The term as to

shipment in good condition was neither a condition nor a warranty but an

intermediate term; and there was no finding that the effect of its breach was

sufficiently serious to justify rejection. The buyers seem to have tried to

reject, not because the utility of the goods was impaired, but because they saw

an opportunity of acquiring them at well below the originally agreed price. In

these circumstances their only remedy was in damages: they were entitled to the

difference in value between damaged and sound goods at the agreed destination.

Schuler v Wickman Machine Tools [1974] AC 235

Wickman were the exclusive selling agents in the UK for Schuler’s goods. The

agency agreement provided that it was a condition that the distributor should

visit six named customers once a week to solicit orders. This entailed

approximately 1,500 visits during the length of the contract. Clause 11 of the

contract provided that either party might determine if the other committed ‘a

material breach’ of its obligations. Wickman committed some minor breaches of

this term, and Schuler terminated the agreement, claiming that by reason of the

term being a condition they were entitled to do so.

The House of Lords held that the parties could not have intended that Schuler

should have the right to terminate the agreement if Wickman failed to make one

of the obliged number of visits, which in total amounted to nearly 1,500. Clause

11 gave Schuler the right to determine the agreement if Wickman committed a

material breach of the obligations, and failed to remedy it within 60 days of

being required to do so in writing.

The House had regard to the fact that the relevant clause was the only one

referred to as a condition. The use of such a word was a strong indication of

intention but it was not conclusive. Lord Reid felt that it would have been

unreasonable for Schuler to be entitled to terminate the agreement for Wickman’s

failure to make even one visit because of the later clause. The word ‘condition’

made any breach of the clause a ‘material breach’, entitling Schuler to give

notice requiring the breach to be remedied. But not, as Schuler sought, to

terminate the contract forthwith without notice.


Hutton v Warren (1836) 1 M&W 466

The tenant of a farm was given six months’ notice to quit. His landlord

insisted that he continue to cultivate the land during the notice period in

keeping with custom. The tenant successfully argued that the same custom

entitled him to a fair allowance for the seeds and labour he used on the land.

The Moorcock (1889) 14 PD 64

The owner of a wharf agreed to provide mooring facilities for ‘The Moorcock’.

The ship was damaged when it hit a ridge of rock at low tide. Although the

defendants had no legal control over the river-bed, they could ascertain its

state but they had not done so. The court held that honesty of business required

an implied undertaking on the part of the wharf owner that it was a reasonably

safe place to moor a ship. The wharf owner had broken his implied undertaking

and was, therefore, liable in damages to the ship owner.

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