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lynt.br:
A sample case extract from the Contracts B Textbook:


--- Quote from: Source=CaseBase ---FACTS
By a time charter dated 26 December 1956, it was mutually agreed between the owners of the vessel Hong Kong Fir, classed Lloyd's 100 A1, and the charterers that (cl 1) the owners would let and the charterers hire the vessel for twenty-four months from the date of her delivery to the charterers at Liverpool “she being in every way fitted for ordinary cargo service”, and that (cl 3) the owners would “maintain her in a thoroughly efficient state in hull and machinery during service”. Under the charter hire was payable at the rate of 47s per ton, but it was provided that no hire should be paid for time lost exceeding twenty-four hours in carrying out repairs to the vessel and that such off-hire periods might at the charterers' option be added to the charter time. The vessel was delivered to the charterers at Liverpool on 13 February 1957, and on the same day she sailed for Newport News, USA, to load a cargo of coal which she was to carry to Osaka. When she was delivered to the charterers at Liverpool, her engine-room was undermanned and her engine-room staff incompetent, although the owners knew that the vessel's machinery was very old and, therefore, required an ample and efficient engine-room staff to maintain it. During the voyage to Osaka, the vessel was off hire for repairs to her engines for a total period of about five weeks, and when she arrived at Osaka, on 25 May 1957, it was found that the engines were in a very bad state and that it would take a further fifteen weeks to make the vessel seaworthy. The condition of the engines at Osaka was due mainly to the inefficiency of the engine-room staff on the voyage from Liverpool. By 15 September 1957, the vessel had been made seaworthy in every respect and then had an efficient and adequate engine-room staff; at that date she was still available to the charterers for seventeen months. In mid-June, there had been a steep fall in freight rates from 47s to 24s per ton, and by mid-August the rates had dropped again to 13s 6d per ton. On 6 June and on 11 September 1957, the charterers had written to the owners repudiating the charter. In an action by the owners for wrongful repudiation, the trial judge found that the owners were in breach of cl 1 of the charter in delivering a vessel that was unseaworthy with regard to her engine-room staff, and were also in breach of cl 3 in negligently failing to maintain the vessel in an efficient state, but that in June there were no reasonable grounds for thinking that the owners were unable to make the vessel seaworthy by mid-September at the latest. The charterers contended
[1962] 1 All ER 474 at 475

that the owners' breaches of charter entitled them to repudiate the charter, alternatively that the charter had been frustrated.

DIPLOCK LJ.

The contract, the familiar Baltime 1939 Charter, and the facts on which this case turns have been already stated in the judgment of Sellers LJ who has also referred to many of the relevant cases. With his analysis of the cases, as with the clear and careful judgment of Salmon J , I am in agreement, and I desire to add only some general observations on the legal questions which this case involves.

Every synallagmatic contract contains in it the seeds of the problem: in what event will a party be relieved of his undertaking to do that which he has agreed to do but has not yet done? The contract may itself expressly define some of these events, as in the cancellation clause in a charterparty, but, human prescience being limited, it seldom does so exhaustively and often fails to do so at all. In some classes of contracts, such as sale of goods, marine insurance, contracts of affreightment evidenced by bills of lading and those between parties to bills of exchange, Parliament has defined by statute some of the events not provided for expressly in individual contracts of that class; but, where an event occurs the occurrence of which neither the parties nor Parliament have expressly stated will discharge one of the parties from further performance of his undertakings, it is for the court to determine whether the event has this effect or not. The test whether an event has this effect or not has been stated in a number of metaphors all of which I think amount to the same thing: does the occurrence of the event deprive the party who has further undertakings still to perform of substantially the whole benefit which it was the intention of the parties as expressed in the contract that he should obtain as the consideration for performing those undertakings? This test is applicable whether or not the event occurs as a result of the default of one of the parties to the contract, but the consequences of the event are different in the two cases. Where the event occurs as a result of the default of one party, the party in default cannot rely on it as relieving himself of the performance of any further undertakings on his part and the innocent party, although entitled to, need not treat the event as relieving him of the performance of his own undertakings. This is only a specific application of the fundamental legal and moral rule that a man should not be allowed to take advantage of his own wrong. Where the event occurs as a result of the default of neither party, each is relieved of the further performance of his own undertakings, and their rights in respect of undertakings previously performed are now regulated by the Law Reform (Frustrated Contracts) Act, 1943.

This branch of the common law has reached its present stage by the normal process of historical growth, and the fallacy in counsel for the charterers' contention that a different test is applicable when the event occurs as a result of the default of one party from that applicable in cases of frustration where the event occurs as a result of the default of neither party arises, in my view, from a failure to view the cases in their historical context. The problem: in what event will a party to a contract be relieved of his undertaking to do that which he has agreed to do but has not yet done? has exercised the English courts for centuries, probably ever since assumpsit emerged as a form of action distinct from covenant and debt, and long before even the earliest cases which we have been invited to examine; but, until the rigour of the rule in Paradine v Jane was mitigated in the middle of the last century by the classic judgments of Blackburn J in Taylor v Caldwell and Bramwell B, in Jackson v Union Marine Insurance Co, it was in general only events resulting from one party's failure to perform his contractual obligations which were regarded as capable of relieving the other party from continuing to perform that which he had undertaken to do.

In the earlier cases before the Common Law Procedure Act, 1852, the problem tends to be obscured to modern readers by the rules of pleading peculiar to the relevant forms of action—covenant, debt and assumpsit, and the nomenclature adopted in the judgments, which were mainly on demurrer, reflects this. It
[1962] 1 All ER 474 at 486

was early recognised that contractual undertakings were of two different kinds: those collateral to the main purpose of the parties as expressed in the contract, and those which were mutually dependent so that the non-performance of an undertaking of this class was an event which excused the other party from the performance of his corresponding undertakings. In the nomenclature of the eighteenth and early nineteenth centuries, undertakings of the latter class were called “conditions precedent”, and a plaintiff under the rules of pleading had to aver specially in his declaration his performance or readiness and willingness to perform all those contractual undertakings on his part which constituted conditions precedent to the defendant's undertaking for non-performance of which the action was brought. In the earliest cases, such as Pordage v Cole and Thorpe v Thorpe, the question whether an undertaking was a condition precedent appears to have turned on the verbal niceties of the particular phrases used in the written contract, and it was not until 1779 that Lord Mansfield, in the case which is a legal landmark, Boone v Eyre ((1779), 1 Hy Bl at p 273 n), swept away these arid technicalities. He said:

    “The distinction is very clear, where mutual covenants go to the whole of the consideration on both sides, they are mutual conditions, the one precedent to the other. But where they go only to a part, where a breach may be paid for in damages, there the defendant has a remedy on his covenant, and shall not plead it as a condition precedent.”

This, too, was a judgment on demurrer, but the principle was the same when the substance of the matter was in issue. Other phrases expressing the same idea were used by other judges in the cases which have already been cited by Sellers LJ (See p 480, letters e to i, ante), and I would only add to his comments on them that, when it is borne in mind that, until the latter half of the nineteenth century, the only event that could be relied on the excuse performance by one party of his undertakings was a default by the other party, no importance can be attached to the fact that, in occasional cases, and there may be others besides Freeman v Taylor, the court has referred to the object or purpose of the party not in default rather than to the object or purpose of the contract, for the relevant object or purpose of the party not in default is that on which there has been a consensus ad idem of both parties as expressed in the words which they have used in their contract construed in the light of the surrounding circumstances.

The fact that the emphasis in the earlier cases was on the breach by one party to the contract of his contractual undertakings, for this was the commonest circumstance in which the question arose, tended to obscure the fact that it was really the event resulting from the breach which relieved the other party of further performance of his obligation; but the principle was applied early in the nineteenth century and without analysis to cases where the event relied on was one brought about by a party to a contract before the time for performance of his undertakings arose, but which would make it impossible to perform those obligations when the time to do so did arrive: for example, Short v Stone; Ford v Tiley; Bowdell v Parsons . It was not, however, until Jackson v Union Marine Insurance Co , that it was recognised that it was the happening of the event and not the fact that the event was the result of a breach by one party of his contractual obligations that relieved the other party from further performance of his obligations. Bramwell B, said ((1874), LR 10 CP at p 147):

    “… there are the cases which hold that, where the shipowner has not merely broken his contract, but so broken it that the condition precedent is not performed, the charterer is discharged … Why? Not merely because

[1962] 1 All ER 474 at 487

    the contract is broken. If it is not a condition precedent, what matters it whether it is unperformed with or without excuse? Not arriving with due diligence, or at a day named, is the subject of a cross-action only. But, not arriving in time for the voyage contemplated, but at such a time that it is frustrated, is not only a breach of contract, but discharges the charterer. And so it should, though he has such an excuse that no action lies.”

Once it is appreciated that it is the event and not the fact that the event is a result of a breach of contract which relieves the party not in default of further performance of his obligations, two consequences follow: (i) The test whether the event relied on has this consequence is the same whether the event is the result of the other party's breach of contract or not, as Devlin J pointed out in Universal Cargo Carriers Corpn v Citati ([1957] 2 All ER at p 83; [1957] 2 QB at p 434). (ii) The question whether an event which is the result of the other party's breach of contract has this consequence cannot be answered by treating all contractual undertakings as falling into one of two separate categories: “conditions”, the breach of which gives rise to an event which relieves the party not in default of further performance of his obligations, and “warranties”, the breach of which does not give rise to such an event. Lawyers tend to speak of this classification as if it were comprehensive, partly for the historical reasons which I have already mentioned, and partly because Parliament itself adopted it in the Sale of Goods Act, 1893, as respects a number of implied terms in contracts for the sale of goods and has in that Act used the expressions “condition” and “warranty” in that meaning. But it is by no means true of contractual undertakings in general at common law.

No doubt there are many simple contractual undertakings, sometimes express, but more often because of their very simplicity (“It goes without saying”) to be implied, of which it can be predicated that every breach of such an undertaking must 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 such a stipulation, unless the parties have agreed that breach of it shall not entitle the non-defaulting party to treat the contract as repudiated, is a “condition”. So, too, there may be other simple contractual undertakings of which it can be predicated that no breach can 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 such a stipulation, unless the parties have agreed that breach of it shall entitle the non-defaulting party to treat the contract as repudiated, is a “warranty”. There are, however, many contractual undertakings of a more complex character which cannot be categorised as being “conditions” or “warranties” if the late nineteenth century meaning adopted in the Sale of Goods Act, 1893, and used by Bowen LJ in Bentsen v Taylor, Sons & Co (2), ([1893] 2 QB at p 280), be given to those terms. 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, unless provided for expressly in the contract, depend on the nature of the event to which the breach gives rise and do not follow automatically from a prior classification of the undertaking as a “condition” or a “warranty”. For instance, to take the example of Bramwell B, in Jackson v Union Marine Insurance Co ((1874), LR 10 CP at p 142), by itself breach of an undertaking by a shipowner to sail with all possible despatch to a named port does not necessarily relieve the charterer of further performance of his obligation under the charterparty, but, if the breach is so prolonged that the contemplated voyage is frustrated, it does have this effect.
[1962] 1 All ER 474 at 488

In 1874, when the doctrine of frustration was being foaled by “impossibility of performance” out of “condition precedent”, it is not surprising that the explanation given by Bramwell B, should give full credit to the dam by suggesting that in addition to the express warranty to sail with all possible dispatch there was an implied condition precedent that the ship should arrive at the named port in time for the voyage contemplated. In Jackson v Union Marine Insurance Co, there was no breach of the express warranty; but, if there had been, to engraft the implied condition on the express warranty would have been merely a more complicated way of saying that a breach of a shipowner's undertaking to sail with all possible dispatch may, but will not necessarily, give rise to an event which will deprive the charterer of substantially the whole benefit which it was intended that he should obtain from the charter. Now that the doctrine of frustration has matured and flourished for nearly a century and the old technicalities of pleading “conditions precedent” are more than a century out of date, it does not clarify, but on the contrary obscures, the modern principle of law where such an event has occurred as a result of a breach of an express stipulation in a contract, to continue to add the now unnecessary colophon

    “therefore it was an implied condition of the contract that a particular kind of breach of an express warranty should not occur.”

The common law evolves not merely by breeding new principles but also, when they are fully grown, by burying their ancestors.
--- End quote ---

Continued in next post because I reached the character limit -__-

lynt.br:

--- Quote ---As my brethren have already pointed out, the shipowner's undertaking to tender a seaworthy ship has, as a result of numerous decisions as to what can amount to “unseaworthiness”, become one of the most complex of contractual undertakings. It embraces obligations with respect to every part of the hull and machinery, stores and equipment and the crew itself. It can be broken by the presence of trivial defects easily and rapidly remediable as well as by defects which must inevitably result in a total loss of the vessel. Consequently, the problem in this case is, in my view, neither solved nor soluble by debating whether the owners' express or implied undertaking to tender a seaworthy ship is a “condition” or a “warranty”. It is, like so many other contractual terms, an undertaking one breach of which may give rise to an event which relieves the charterer of further performance of his undertakings if he so elects, and another breach of which may not give rise to such an event but entitle him only to monetary compensation in the form of damages. It is, with all deference to counsel for the charterers' skilful argument, by no means surprising that, among the many hundreds of previous cases about the shipowner's undertaking to deliver a seaworthy ship, there is none where it was found profitable to discuss in the judgments the question whether that undertaking is a “condition” or a “warranty”; for the true answer, as I have already indicated, is that it is neither, but one of that large class of contractual undertakings, one breach of which may have the same effect as that ascribed to a breach of “condition” under the Sale of Goods Act, 1893, and a different breach of which may have only the same effect as that ascribed to a breach of “warranty2 under that Act. The cases referred to by Sellers LJ illustrate this, and I would only add that, in the dictum which he cites from Kish v Taylor ([1912] AC at p 617; 12 Asp MLC at p 220), it seems to me from the sentence which immediately follows it as from the actual decision in the case and the whole tenor of Lord Atkinson's speech itself that the word “will” was intended to be “may”.

What the learned judge had to do in the present case as in any other case where one party to a contract relies on a breach by the other party as giving him a right to elect to rescind the contract, was to look at the events which had occurred as a result of the breach at the time at which the charterers purported
[1962] 1 All ER 474 at 489

to rescind the charterparty, and to decide whether the occurrence of those events deprived the charterers of substantially the whole benefit which it was the intention of the parties as expressed in the charterparty that the charterers should obtain from the further performance of their own contractual undertakings. One turns, therefore, to the contract, the Baltime 1939 Charter. Clause 13, the “due diligence” clausec, which exempts the shipowners from responsibility for delay or loss or damage to goods on board due to unseaworthiness unless such delay or loss or damage has been caused by want of due diligence of the owners in making the vessel seaworthy and fitted for the voyage, is in itself sufficient to show that the mere occurrence of the events that the vessel was in some respect unseaworthy when tendered or that such unseaworthiness had caused some delay in performance of the charterparty would not deprive the charterer of the whole benefit which it was the intention of the parties he should obtain from the performance of his obligations under the contract—for he undertakes to continue to perform his obligations notwithstanding the occurrence of such events if they fall short of frustration of the contract and even deprives himself of any remedy in damages unless such events are the consequence of want of due diligence on the part of the shipowner.

c     The relevant part of this clause is set out at p 477, letter a, ante

The question which the learned judge had to ask himself was, as he rightly decided, whether or not, at the date when the charterers purported to rescind the contract, namely 6 June 1957, or when the owners purported to accept such rescission, namely 8 August 1957, the delay which had already occurred as a result of the incompetence of the engine-room staff, and the delay which was likely to occur in repairing the engines of the vessel and the conduct of the owners by that date in taking steps to remedy these two matters, were, when taken together, such as to deprive the charterers of substantially the whole benefit which it was the intention of the parties they should obtain from further use of the vessel under the charterparty. In my view, in his judgment—on which I would not seek to improve—the learned judge took into account and gave due weight to all the relevant considerations and arrived at the right answer for the right reasons.
--- End quote ---

I'm fairly sure this is how the case appears in my casebook. It is only an extract because the judgment of the other two judges has been left out. The casebook trims down cases so that they only discuss a certain key principle. For instance, this case involved two major issues: termination for breach and frustration, however, for the purpose of the course we are only interested in termination for breach (frustration is covered by other cases, presumably this is not a good case for principles on frustration) so everything about frustration is left out. In some cases, there are a huge number of different issues so the case extract can be tiny compared with the full-length case.

This also probably looks like a huge wall of text but it is actually one of the shorter cases in the casebook. On paper, it only takes up ~3.5 pages. The average case in Contracts is around 5 pages long, although every so often there are 10 or 20 page cases which can take a while to get through. You also learn to skim read cases. When I read cases, I tend to quickly skim over every paragraph and identify all the important paragraphs or sections. I then carefully read these sections while largely ignoring everything else.

My summary of this case (which was made before semester actually started when I was using a different summary style):

--- Quote ---Hongkong Fir Shipping Co v Kawasaki Kisen Kaisha [1962]

Case in summary:
   • Established concept of an intermediate term.
   • If a term can be breached in a number of ways, some trivial, some serious, it is an intermediate term.
   • Termination is justified if the breach is substantial (as opposed to a condition where any breach justifies termination.
   • The important test is:
      ○ Did the breach deprive K of substantially the whole benefit which it was the intention of the parties as expressed in the agreement? - Lord Diplock
      ○ The standard necessary to satisfy this test is VERY high. In this case, even though the ship was unavailable for 8 months, the court held the breach did not justify termination.
      ○ Use this case as a qualitative comparison when applying the test. Compare the breach to the breach in this case., which indicates the threshold where the test is satisfied.

Facts:
   • H chartered a ship to K, promised to 'maintain her in a thoroughly efficient state in hull and machinery during service'.
   • The ship was out of service for some time because it was unseaworthy.
   • K attempted to terminate K.

Issue:
   • Did the failure to maintain the ship in good condition justify termination?
   • Was the term a condition or intermediate term?
   • If the latter, was the breach serious?

Rule:
   • Breach of an intermediate term will justify termination where the breach deprives 'the party who has further undertakings still to perform of substantially the whole benefit which it was the intention of the parties as expressed in the K that he should obtain' (per Diplock LJ)

Application:
   • 'unseaworthiness' can be construed in a number of ways. It may be broken by a trivial or serious defect.
   • Must look at the consequences of breach at time of purported termination.
   • Did the breach deprive K of substantially the whole benefit which it was the intention of the parties as expressed in the agreement?

Decision:
   • Even though H was in breach of K, the breach was not serious enough to justify termination
   • Appeal dismissed.

Case comparisons/Additional Notes/Questions Raised:
   • This is an English case. The equivalent Australian Authority is Koompahtoo Local Aboriginal Land Council v Sanpine


--- End quote ---

So from the summary it is clear I can use this case as authority for the principle of termination for breach. The case established the important test in the 'Rule' section of my summary. I can apply this same test to a different fact scenario when I want to determine whether there has been a sufficiently serious breach of an intermediate term to justify termination. It also provides a good indication of the magnitude of breach needed to allow termination. The discussion on 'seaworthiness' is also useful for categorising terms as conditions or intermediate terms -> I can use the same principle and ask whether the term can be breached in a number of ways, each varying in severity, to determine how a term should be classified.

vexx:
Thanks for the replies btw, haha lynt i actually don't understand what that case is on about. Maybe i'm a bit tired and can't think ><

&ninwa, i guess law is not the best idea if i'm wanting to try to transfer into med after first year at unsw where i need a high GPA cos law will bring me down?
that suckks. i just listened to the start of the first law unit 'intro to law reasoning' i think it was called, and it seemed okay..

ninwa:
lynt I think that's a little too complex for people who've never had any exposure to legal studies before :P

vexx, definitely do not do law if you're just aiming for a high GPA to transfer. Law is probably one of the more likely disciplines to kill your average.
Also intro to legal reasoning is nothing like actual substantive law units - try criminal law, it's probably one of the easier subjects (and more interesting too, who doesn't like learning about murder and drugs???)

lynt.br:

--- Quote from: vexx on August 31, 2010, 12:25:18 am ---Thanks for the replies btw, haha lynt i actually don't understand what that case is on about. Maybe i'm a bit tired and can't think ><

&ninwa, i guess law is not the best idea if i'm wanting to try to transfer into med after first year at unsw where i need a high GPA cos law will bring me down?
that suckks. i just listened to the start of the first law unit 'intro to law reasoning' i think it was called, and it seemed okay..

--- End quote ---

Introduction to Legal Reasoning (ILR) is one of two introductory law units. It is not a very good representation of what other law subjects will be like because its purpose is to just bring everyone up to speed with our legal system, its history and the basics of how it works etc. It's essentially year 12 legal studies crammed into the first six or so weeks, and then a little bit on statutory interpretation for the rest. Unlike other law subjects, you do not go into the actual substantive law.


--- Quote from: ninwa on August 31, 2010, 12:27:57 am ---vexx, definitely do not do law if you're just aiming for a high GPA to transfer. Law is probably one of the more likely disciplines to kill your average.

--- End quote ---
ugh, its the other way round for me. My commerce units are the ones dragging down my GPA =[

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