Breach Of Condition: Everything You Need to Know
Breach of condition of a contract can constitute a breach of the contract as a whole. 3 min read
2. What Is a Condition?
4. Innominate Term
5. Condition v. Warranty
6. Remedies for Breach of Conditions
Breach of Condition
Breach of condition of a contract can constitute a breach of the contract as a whole. This may allow the non-breaching party to sue for damages as well as rescission of the contract.
What Is a Condition?
The terms of a contract are classified as conditions, warranties, or innominate terms. Parties will usually designate which classification a contract term falls. This helps parties determine the possible remedies available if there is a claim for breach of contract.
Conditions are very important instruments in a contract. A condition can do many things:
- Invest or divest the rights or interests of the parties to the contract
- Invest or divest the duties of the parties to the contract
- Determine the existence and/or extent of a liability or obligation under the contract
- Initiate or terminate the requirement to perform a duty
- Stipulate that the occurrence of a certain event will create or terminate the contract
Conditions can be express or implied. An express condition is an actually stipulated to condition called a “condition in deed.” These conditions are clearly defined and agreed to by the parties while entering into the contract.
An implied condition, or “condition in law,” is a condition that is automatically present without express statement. These conditions are not expressly provided, but as per law, are supposed to be present while entering into the contract. An express agreement can be made to waive one or more of these implied conditions.
Here is a list of some of the implied conditions:
- The title of goods condition
- The quality and fitness of the goods condition
- The wholesomeness condition
- Sale by description
- Sale by sample
If a term in the contract is a minor term because it is only incidental, this term is not a condition, but rather a warranty. Warranties are less significant than conditions and are usually written as an assurance or a promise. Breach of a warranty may allow a claim for damages but will not rescind the contract.
This way, the non-breaching party will still receive the whole of the benefit of the contract. A term that is a warranty in one contract might be a condition in another depending on how important that term is to the parties.
An innominate term is neither a condition nor a warranty. In order to determine the available remedies, the parties need to consider the significance of the term and breach of said term. If the nature and effect of the breach, at the time the breach occurred, deprives a party of the whole of the benefit of the contract, then the term will be considered a condition.
If a condition, the party can terminate the contract. However, if the nature and effect of the breach, at the time the breach occurred, does not deprive a party of the whole of the benefit of the contract, then the term will be considered a warranty and that party will only be able to sue for damages.
Condition v. Warranty
If the contract is silent as to whether a term is a condition or a warranty, a court will rule that the term is a condition if:
- Statute or case law has determined that the term is a condition.
- The contract clearly entitles the aggrieved party to terminate the contract if the term is breached.
- It would be just to infer that the parties meant for a breach of that term to allow the aggrieved party to terminate the contract.
The term will be considered a warranty by a court if:
- Statute or case law has determined that the term is a warranty.
- The contract expressly provides that the aggrieved party will only be entitled to damages if the term is breached.
- It would be just to infer that the parties did not mean for a breach to allow the aggrieved party to terminate the contract.
Remedies for Breach of Conditions
Breach of conditions usually allow a party to sue for damages as well as rescission/termination of the contract. However, the breach of a condition of release in the bail bond is actually a crime. An accused, released on bail, must adhere to the conditions set forth in the bond. Failing to appear as required by the bond and/or knowingly breaching any condition of release are each treated as a separate punishable offense. The court will issue a warrant and re-arrest the accused.
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