Thread: Endahwaste Sdn. Bhd. advise ??

(EWSB) is a company which disposes of chemical waste.
It has a contract with ProChem Limited (PCL) and in the contract it was stated
that 'It shall be a condition of this agreement that EWSB will visit the premises of
PCL once a week to collect and dispose of the waste material from the chemical
factory". After three months EWSB was unable to visit the premises on one
occasion because most of its driver was ill with flu. The following week PCL
discovers that the waste, which had been collected by EWSB on previous
occasions, had been transported in a vehicle which did not comply with safety
provisions of the regulating statute. PCL now wishes to repudiate the contract and
refused to pay EWSB for the work which had been carried out during the past
three months.
Advise EWSB of its legal position.


(relative to some law cases)


THks

You are dealing here with a hypothetical fact situation which requires you to direct your mind to the doctrine of frustration.

What is contractual frustration?

What is the legal effect of a frustrating event on the non-defaulting party - what remedies does he have?

There are two events - you must argue for and against the contetion that they amount to one or more frustrating event.

Would you regard a failure to visit one one occasion as a frustrating event? There is a case on this

Is a failure to conform to the statutary requirements of transportation a supervening illegality? There is case law on this too.

Forseeable? Self induced?

Conclusion.

Advise EWSB

Possible but I am not too sure that it would be meaningless or impossible for the parties to continue with contract though

Thanks no6 and molineux for the reply...
can i have some law cases which relative to that situation??
thkS~~~

wrongful repudiation - L. Schuler AG v Wickman machine tools [1974] AC 235 (HL); the word "condition" is not enough to determine the parties' intention.

Just one to get you on to the right area.

Purple, please be so kind to show us the end result after submission!<br>

mike...ok ...no problem
thks for helping me....

anyone have more examples of law cases which related to this situation??

pls help....thks

EWSB was unable to visit the premises on one occasion -
This is of course a breach of contract. Here you need to discuss the remedies for a breach of contractual terms but first you need to distinguish between condition, warranty and innominate terms, then apply it on the fact, do you consider this breach a condition or warranty or innominate terms?


1. To illustrate the difference between differenct terms - Poussard v Spiers, Bettini v Gye.
2. The seriousness of the breach may however determine whether a term is a condition or warranty? - Hongkong Fir v Kawaski, Bunge Corporation v Tradax SA.

Criticisms of the above approaches (a) "goes to the root of the problem as in Poussard v Spears (b) "effect of the breach" as in Hongkong fir.

OR looking for the parties' intention see
(c) "labelling the terms" as in Schuler v Wickman Tools OR (d) perhaps the parties may have past dealings so one may consider "the course of dealings" to determine the parties intention. as in British Crane Hire v Ipswich.

So, you may conclude by taking a stand of the different approaches taken by the court either " arguing for a need for certainty" or "arguing for in the interest of justice approach".

CONDITIONS AND WARRANTIESPoussard v Spiers (1876) 1 QBD 410

Poussard was engaged to appear in an operetta from the start of its London run for three months. The plaintiff fell ill and the producers were forced to engage a substitute. A week later Poussard recovered and offered to take her place, but the defendants refused to take her back.

The court held that the defendant's refusal was justified and that they were not liable in damages. What chiefly influenced the court was that Poussard's illness was a serious one of uncertain duration and the defendants could not put off the opening night until she recovered. The obligation to perform from the first night was a condition of the contract. Failure to carry out this term entitled the producers to repudiate Poussard's contract.



Bettini v Gye (1876) 1 QBD 183

Bettini, an opera singer, was engaged by Gye to appear in a season of concerts. He undertook to be in London at least six days before the first concert for the purpose of rehearsals. He arrived three days late because of a temporary illness. He gave no advance notice and Gye refused to accept his services.

It was held that the plaintiff had been engaged to perform for a 15-week season and the failure to attend rehearsals could only affect a small part of this period. The promise to appear for rehearsals was a less important term of the contract. The defendant could claim compensation for a breach of warranty but he could not repudiate Bettini's contract.



Hong Kong Fir Shipping [1962] 1 All ER 474

The defendants chartered a vessel from the plaintiffs for 24 months, "she being fitted in every way for ordinary cargo service." The engine room staff turned out to be inefficient and the engines were old with the result that she was held up for repairs for five weeks mid-voyage. It was then found that further repairs, requiring 15 weeks to complete, were necessary to make her seaworthy. Although the charterparty still had 20 months to run, the defendants repudiated the contract and claimed that the term as to seaworthiness was a condition of the contract, any breach of which entitled them to do so. The plaintiffs claimed damages for wrongful repudiation.

The Court of Appeal decided the term was neither a condition nor a warranty, and in determining whether the defendants could terminate the contract, it was necessary to look at the consequences of the breach to see if they deprived the innocent party of substantially the whole benefit he should have received under the contract. On the facts, this was not the case, because the charterparty still had a substantial time to run. The defendants could only claim damages.

Diplock LJ said that there are many contractual undertakings of a complex character which cannot be categorised as being conditions or warranties. Of such undertakings some breaches will and others will not give rise to an event which will deprive the innocent party of substantially the whole benefit which it was intended he should obtain from the contract. The legal consequences of a breach of such undertaking, unless expressly provided for in the contract, depend upon 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 warranty.

In the present case the shipowner's undertaking as to seaworthiness could be broken by the presence of trivial defects easily and rapidly remediable as well as by defects which would result in a total loss of the vessel. Consequently, the undertaking was 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.



The Mihalis Angelos [1971] 1 QB 164

The owners of a ship let it to charterers, undertaking that the ship would be expected ready to load about 1 July, would proceed to a certain port for the loading of cargo, and that the charterer would have the option of cancelling the charter if the ship was not ready to load by July 20. The charterer was unable to get a cargo by July 17 and cancelled the charter, alleging that it was frustrated. The ship itself was not ready until July 23. At trial it was argued that the charterer was entitled to avoid the contract on July 17 because of a breach of contract by the shipowner, ie he had impliedly promised that he had reasonable grounds for believing that the ship would be ready to load on July 1, and that there were no such grounds. The trial judge held that there was a breach of this term, but the term was not a condition and the breach was not so fundamental as to give the right to terminate the contract.

The Court of Appeal held that the term was a condition and that the charterer had properly avoided the contract even though he had done so on the ground that the contract was frustrated when this was not the case. Lord Denning stated that "The fact that a contracting party gives a bad reason for determining it does not prevent him from afterwards relying on a good reason when he discovers it." Megaw LJ, discussing the term "expected ready to load … " stated:

"… such a term in a charterparty ought to be regarded as being a condition of the contract, in the old sense of the word "condition"; that is that when it has been broken, the other party can, if he wishes, by intimation to the party in breach, elect to be released from performance of his further obligations under the contract; and he can validly do so without having to establish that, on the facts of the particular case, the breach has produced serious consequences which can be treated as "going to the root of the contract" or as being "fundamental," or whatever other metaphor may be thought appropriate for a frustration case."



The Hansa Nord [1976] QB 44

Citrus pulp pellets for use in animal food had been sold for £100,000 under a contract which provided for "shipment to be made in good condition." Part of the goods had not been so shipped and in addition the market value in such goods had fallen at the delivery date. The buyers rejected the goods which were later resold pursuant to a court order and eventually reacquired by the original buyers for just under £34,000. The buyers then used the goods for the originally intended purpose of making cattle food, though the defective part of the goods yielded a slightly lower extraction rate than sound goods would have done.

The Court of Appeal held that rejection was not justified. The term as to shipment in good condition was neither a condition nor a warranty but an intermediate term; and there was no finding that the effect of its breach was sufficiently serious to justify rejection. The buyers seem to have tried to reject, not because the utility of the goods was impaired, but because they saw an opportunity of acquiring them at well below the originally agreed price. In these circumstances their only remedy was in damages: they were entitled to the difference in value between damaged and sound goods at the agreed destination.



Reardon Smith Line v Hansen-Tangen [1976] 3 All ER 570

In order to perform a charter, a steamship company nominated a vessel to be built by Osaka Shipbuilding Co and known as "Yard No. 354 at Osaka" (the name of the shipbuilder). She was built elsewhere, but by a company under Osaka's control and in accordance with the physical specifications in the charter. The tanker market fell and the charterers sought to reject.

It was held by the House of Lords that they were not entitled to do so. The phrase "Yard No. 354 at Osaka" was not part of the description but a mere substitute for a name: it was a means of identification, which, in the circumstances, had not failed. In order to reach this decision, the House looked at the background to the case. Lord Wilberforce expressed the view that the court must place itself in thought in the same factual matrix as that in which the parties were. In order to place himself in that factual matrix, he asked what was the commercial purpose of the charter parties and what was the factual background against which they were made.



Bunge Corp. v Tradax [1981] 2 All ER 513

Under a contract for the sale and purchase of soya bean meal, it was agreed that a shipment was to be made in June, by the 30th. The buyers had to provide a vessel and to give at least 15 days' notice of its probable readiness. The sellers would then nominate a port for delivery. The buyer gave notice on June 17, less than 15 days before the end of the shipment period. The seller repudiated the contract arguing that there had been a breach.

The House of Lords held that this term was a condition, so that the sellers were entitled to rescind on the ground that the notice reached them five days too late. Two justifications were given for this classification: (1) the sellers could not, as a practical matter, perform their own obligation of nominating a port for delivery until the buyers had given them notice of the ship's readiness to load; and (2) the classification promoted certainty, for it enabled the sellers to tell, immediately on receipt of the notice of the ship's readiness to load, whether they were bound to deliver. The House of Lords thought that in mercantile contracts time would usually be of the essence and not an innominate term.



Schuler v Wickman Machine Tools [1974] AC 235

Wickman were the exclusive selling agents in the UK for Schuler's goods. The agency agreement provided that it was a condition that the distributor should visit six named customers once a week to solicit orders. This entailed approximately 1,500 visits during the length of the contract. Clause 11 of the contract provided that either party might determine if the other committed 'a material breach' of its obligations. Wickman committed some minor breaches of this term, and Schuler terminated the agreement, claiming that by reason of the term being a condition they were entitled to do so.

The House of Lords held that the parties could not have intended that Schuler should have the right to terminate the agreement if Wickman failed to make one of the obliged number of visits, which in total amounted to nearly 1,500. Clause 11 gave Schuler the right to determine the agreement if Wickman committed a material breach of the obligations, and failed to remedy it within 60 days of being required to do so in writing.

The House had regard to the fact that the relevant clause was the only one referred to as a condition. The use of such a word was a strong indication of intention but it was not conclusive. Lord Reid felt that it would have been unreasonable for Schuler to be entitled to terminate the agreement for Wickman's failure to make even one visit because of the later clause. The word 'condition' made any breach of the clause a 'material breach', entitling Schuler to give notice requiring the breach to be remedied. But not, as Schuler sought, to terminate the contract forthwith without notice
Above from law teacher