Tripartite Classification 1.Conditions, or essential terms 2.Intermediate (or innominate) terms 3.Warranties This division only applies to considering whether the breach of a term gives rise to a right to terminate the contract.
Condition? Per Latham CJ in Luna Park v Tramways Advertising: ‘It was a term of the contract which went so directly to the substance of the contract or was so “essential to its very nature that its non-performance may fairly be considered by the other party as a substantial failure to perform the contract at all.” ’
Test of Essentiality Jordan CJ in Tramways Advertising v Luna Park, cited in Associated Newspapers Ltd v Bancks: ‘The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor.’
Intermediate Terms Two-step test: 1.Can the term be breached in a variety of ways? 2.Is this particular breach sufficiently serious so as to give rise to a right to terminate?
Repudiation 1. they renounce their liabilities under the contract; 2. they evince their intention no longer to be bound 3. they evince their intention to perform their obligations only in a manner inconsistent with the true construction of the contract
Categories of Repudiation 1.By words or conduct [Won’t] 1.Express 2.Implied 3.Unjustifiable interpretation 2.By factual inability to perform [Can’t] 1.Express 2.Implied
Time Stipulations Common Law rule: time is of the essence unless otherwise indicated Equity: time is NOT of the essence unless it is expressly stated to be so, or it would be inequitable to treat it otherwise
Notice To be effective, notice must: 1.state which obligation is to be performed 2.fix a reasonable time in the circumstances for performance 3.clearly indicate that failure to comply with the notice will result in termination of contract