Innominate Terms: Everything You Need to Know
An innominate term is the middle point between a condition and a warranty. It is often considered the “no-mans land” between the two.3 min read
An innominate term is the middle point between a condition and a warranty. It is often considered the “no-mans land” between the two. Innominate terms, conditions, and warranties are types of promises made in contracts. If one of the parties in the contract doesn't fulfill these promises, it is considered a breach of contract, and that party can be held responsible for damages. In some cases, a breach allows the aggrieved party to terminate the contract. This is called a repudiatory breach, and only certain types of terms allow this to happen.
A condition is a promise or fact that forms the basis of the contract. Conditions go to the heart of the contract and are one of the most important parts. In the case of a breached condition, the innocent party is allowed to end the contract.
You can tell if a term is a condition instead of a warranty if:
- It is referred to in the contract as a condition.
- Both parties agree that the term should be a condition.
- The nature of the contract or the actions of the parties suggest that both parties expect for the term to be a condition.
- Case law shows that the term is a condition.
If a condition is breached, the aggrieved party can do one of two things:
- End the contract and sue for damages.
- Continue with the contract, sue for damages, and seek other resolutions.
A contract could be made to repair a broken microwave with a condition that states that only a certain brand of parts is to be used. If the repairer uses a different brand of parts, the customer could consider it a breach of the condition. The customer could then terminate the contract, sue for damages, and find someone else to make the repairs.
A warranty in a contract is considered to be less important than a condition. If a term isn't a condition or an innominate term, it is a warranty. In contract law, a warranty doesn't refer to the warranties that come with the purchase of things like electronics or appliances.
In the case of a breached warranty, the innocent party can only receive damages. They can not cancel the contract. If the innocent party terminates the contract, they are at risk of being sued for unjustified contract termination.
If it is breached, an innominate term could have a wide range of consequences. Some innominate terms have small consequences, and others have much larger consequences. In the case of a breach, the court or an arbitrator will decide the impact of the term and if the contract is legally allowed to be terminated.
If the innominate term was so important that breaching it ruined the entire value of the contract for the innocent party, it is likely the court will allow the aggrieved party to end the contract. However, if the innominate term is ruled to be minor and has a small impact, the innocent party will likely only be allowed to sue for damages and not allowed to terminate the contract.
A breach of contract can be ruled serious or minor following several tests, including:
- If the innocent party is stripped of the entire benefit of the contract.
- If the breach hits the most important aspects of the contract.
In order to make these decisions, courts or arbitrators look at a number of factors, including:
- Amount of damages caused to the innocent party.
- Time lost for the innocent party.
- Value of the action to the innocent party.
- Cost for the innocent party to remedy the situation.
- If the breaching party made an effort to fix the situation.
- If there have been breaches before.
- If it is likely breaches will occur in the future.
- If compensation will be reasonable.
Defining a term as innominate requires some degree of interpretation and research. There is also circular logic, such as stating that an innocent party is allowed to end a contract if the serious breach is of an innominate term and saying that a term is innominate if it allows the contract to be ended for a serious breach.
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