UNIT 4

CONDITIONS

A condition is a fundamental term that goes to the root of the contract. If a condition is breached, the innocent party can terminate the contract and claim damages. See the case of Poussard v Spiers (1876) 1 QBD 410 where the court held that a condition is a term that is vital to the contract, and its breach allows the innocent party to repudiate the contract and the Sale of Goods Act 1893 under section 11 which defines a condition as a stipulation essential to the main purpose of the contract, the breach of which gives the right to treat the contract as repudiated.

WARRANTIES

A warranty is a minor term in a contract. Breach of a warranty does not entitle the innocent party to terminate the contract but allows them to claim damages. See the case of Bettini v Gye (1876) 1 QBD 183 where the court held that a warranty is a term of lesser importance, the breach of which does not allow for repudiation but only for a claim for damages and the Sale of Goods Act 1893 under section 62(1) which defines a warranty as a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not a right to reject the goods and treat the contract as repudiated.

DISTINGUISHING CONDITIONS FROM WARRANTIES

The distinction between conditions and warranties can be challenging. Courts generally look at the intention of the parties and the effect of the breach. See the case of Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 which introduced the concept of "innominate terms" where the breach can be treated as either a condition or a warranty depending on the seriousness of the breach and its consequences.

EXCLUSION CLAUSES

Exclusion clauses are terms in a contract that seek to limit or exclude liability for certain breaches or specific scenarios. These clauses are subject to strict interpretation by the courts. For an exclusion clause to be valid, it must be incorporated into the contract, clear and unambiguous, and must not be against public policy. See the case of L'Estrange v F Graucob Ltd [1934] 2 KB 394 where an exclusion clause will be binding if the contract is signed, regardless of whether the party has read the terms and the Nigerian Consumer Protection Council Act 1992 which provides that any attempt to contract out of liability for defective or unsafe products is void.

INCORPORATION OF EXCLUSION CLAUSES

An exclusion clause must be properly incorporated into the contract either by signature, notice, or previous course of dealing. See the case of Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163 where the court held that an exclusion clause must be brought to the notice of the party at the time of contracting.

CONSTRUCTION OF EXCLUSION CLAUSES

Exclusion clauses are construed contra proferentem, meaning any ambiguity is interpreted against the party seeking to rely on it. See the case of Houghton v Trafalgar Insurance Co Ltd [1953] 2 All ER 1409 where an exclusion clause was interpreted strictly, and any ambiguity was resolved against the party relying on the clause.

FUNDAMENTAL BREACH

Fundamental breach refers to a breach so serious that it goes to the root of the contract and deprives the innocent party of substantially the whole benefit of the contract. The doctrine of fundamental breach was developed to determine whether an exclusion clause could be relied upon in the event of a significant breach. Historically, it was believed that an exclusion clause could not protect a party from liability for a fundamental breach. See the case of Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 where the House of Lords held that an exclusion clause could apply even in cases of fundamental breach, provided it is clearly and unambiguously worded and the case of Niger Insurance Co Ltd v Abed Brothers Ltd (1976) 7 SC 35 where the Nigerian Supreme Court held that an exclusion clause could not protect the insurer from liability for a fundamental breach. See also the Nigerian Contract Act 2004 which provides general principles for contract formation, performance, and breach, including the enforceability of exclusion clauses and remedies for fundamental breach.

CONCLUSION

Understanding the distinctions between conditions, warranties, exclusion clauses, and fundamental breaches is crucial in contract law. These concepts help determine the rights and remedies available to parties in the event of a breach, ensuring clarity and fairness in contractual relationships.