Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd

From Uni Study Guides
Jump to: navigation, search

Citation: [1962] 2 QB 26

This information can be found in the Casebook: Paterson, Robertson & Duke, Contract: Cases and Materials (Lawbook Co, 11th ed, 2009), pp. 528-431 [21.45]

Contents

Background facts

  • Plaintiff [Hongkong] owned a ship and chartered it to the Defendant [Kawasaki]
  • A clause in the agreement guaranteed that the ship would be in good condition etc.
  • The ship in fact was not in good condition, and its repairs caused a lot of delays for the Defendant
  • The Defendant, after having problems with the bad state of the ship, notified the Plaintiff that the condition of the ship being in good condition was breached and therefore they elect to terminate the contract.
  • The Plaintiff notified the Defendant that they consider this wrongful termination, and sued them for repudiating the contract.

Legal issues

Judgment

  • The classification between conditions and warranties is essentially a classification between which terms effectively deprives the Aggrieved party from the substantial benefit of the contract (conditions) and those who do not (warranties).
  • However, there are many terms which are in the middle - a serious breach of them deprive the Aggrieved party from the substantial benefit, whilst a slight breach would not. These are intermediate terms
    • "There are however, many contractual undertakings of a more complex character which cannot be categorised as being 'conditions' or 'warranties'...of such undertakings all that can be predicated is that some breaches will and others will not 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 the legal consequences of a breach of such an undertaking...'depend upon the nature of the event of which the breach gives rise and do not follow automatically from a prior classification[1]"
  • With intermediate terms, the judge must look and see what were the consequences of the breach - did the seriousness of the breach deprive the Aggrieved party from basically the entire benefit of the contract? if yes, he is allowed to terminate.
  • In this case, the clause of good condition can only be seen as intermediate - obviously there could be a lot of small defects which would be easily dealt with and not deprive the Defendant from the entire benefit of the contract. It would be unjustified to give the Defendant the right to terminate for a tiny defect.
  • However, if the ship was completely out of order (a serious breach), and brought about such delays that the Defendant could not obtain benefit from having the ship (i.e. couldn't sail at all, arrived too late for all its shipments etc), then it would justify giving the Defendant the right to terminate.
  • In conclusion, such a serious breach did not occur here. The delays were not great enough to deprive the Defendant of the substantial benefit.

References

  1. [1962] 2 QB 26, 70
Personal tools
Namespaces

Variants
Actions
Navigation
Toolbox