Breach of contract?

The first issue requires you to discuss whether the court may rewrite the contract for a term expressly stated to be a condition. Blackburn J said in Bettini v Gye: 'Parties may think some matter, apparently of very little importance, essential; and if they sufficiently express an intention to make the literal fulfilment of such a thing a condition precedent, it will be one.'

The second issue involves estoppel, your starting position is correct, but it requires you to go further, discuss how promissory estoppel operates.

In both cases, you need to look out for relevant cases to support your argument.

From Wikipedia, the free encyclopedia
L Schuler AG v Wickman Machine Tool Sales Ltd UKHL 2 is an English contract law case, concerning the right to terminate performance of a contract.
Facts

Wickman alleged that Schuler AG wrongfully terminated their contract for Wickman to visit car makers to market Schuler’s panel presses, as their sole representative for 4 and a half years, even though Wickman had failed to make visits. Clause 7(b) said, ‘It shall be a condition of this agreement that shall send its representatives to visit at least once in every week for the purpose of soliciting orders for panel presses.’ Clause 11 said either party could end the agreement if the other was in material breach and did not change its behaviour on 60 days' notice. Mr Wickman failed to make any visits at the start. This was waived by Schuler at first, but then when Wickman was making some but not all the visits, Schuler terminated. Wickman sued, alleging Schuler was not allowed to terminate.
Judgment

The House of Lords held by a majority that Schuler was not entitled to terminate, and held clause 7(b) to be not a condition. Clause 7 was to be read with clause 11, so that notice would need to be given to remedy the situation, and if notice and 60 days to change was not given, then clause 7 would not be breached. Only after 60 days without compliance would ‘rescission’ (ie termination) be allowed. Lord Reid said the following.
Lord Morris, Lord Simon and Lord Kilbrandon concurred.
Lord Wilberforce dissented, holding that Schuler should have been able to terminate.

Lord Reid
Clause 7 begins with the general requirement that Wickman shall 'use its best endeavours' to promote sales of Schuler products. Then there is in cl 7(b)(i) specification of those best endeavours with regard to panel presses, and in cl 12(b) a much more general statement of what Wickman must do with regard to other Schuler products. This intention to impose a stricter obligation with regard to panel presses is borne out by the use of the word 'condition' in cl 7(b). I cannot accept Wickman's argument that condition here merely means term. It must be intended to emphasise the importance of the obligations in sub-cll (b)(i) and (b)(ii). But what is the extent of that emphasis?
Schuler maintain that the word 'condition' has now acquired a precise legal meaning; that, particularly since the enactment of the Sale of Goods Act 1893, its recognised meaning in English law is a term of a contract any breach of which by one party gives to the other party an immediate right to rescind the whole contract. Undoubtedly the word is frequently used in that sense. There may, indeed, be some presumption that in a formal legal document it has that meaning. But it is frequently used with a less stringent meaning. One is familiar with printed 'conditions of sale' incorporated into a contract, and with the words 'for conditions see back' printed on a ticket. There it simply means that the 'conditions' are terms of the contract.
In the ordinary use of the English language 'condition' has many meanings, some of which have nothing to do with agreements. In connection with an agreement it may mean a pre-condition: something which must happen or be done before the agreement can take effect. Or it may mean some state of affairs which must continue to exist if the agreement is to remain in force. The legal meaning on which Schuler rely is, I think, one which would not occur to a layman; a condition in that sense is not something which has an automatic effect. It is a term the breach of which by one party gives to the other an option either to terminate the contract or to let the contract proceed and, if he so desires, sue for damages for the breach.
Sometimes a breach of a term gives that option to the aggrieved party because it is of a fundamental character going to the root of the contract, sometimes it gives that option because the parties have chosen to stipulate that it shall have that effect. Blackburn J said in Bettini v Gye: 'Parties may think some matter, apparently of very little importance, essential; and if they sufficiently express an intention to make the literal fulfilment of such a thing a condition precedent, it will be one.'
In the present case it is not contended that Wickman's failures to make visits amounted in themselves to fundamental breaches. What is contended is that the terms of cl 7 'sufficiently express an intention' to make any breach, however small, of the obligation to make visits a condition so that any such breach shall entitle Schuler to rescind the whole contract if they so desire.
Schuler maintain that the use of the word 'condition' is in itself enough to establish this intention. No doubt some words used by lawyers do have a rigid inflexible meaning. But we must remember that we are seeking to discover intention as disclosed by the contract as a whole. Use of the word 'condition' is an indication--even a strong indication--of such an intention but it is by no means conclusive. The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear.
Clause 7(b) requires that over a long period each of the six firms shall be visited every week by one or other of two named representatives. It makes no provision for Wickman being entitled to substitute others even on the death or retirement of one of the named representatives. Even if one could imply some right to do this, it makes no provision for both representatives being ill during a particular week. And it makes no provision for the possibility that one or other of the firms may tell Wickman that they cannot receive Wickman's representative during a particular week. So if the parties gave any thought to the matter at all they must have realised the probability that in a few cases out of the 1,400 required visits a visit as stipulated would be impossible. But if Schuler's contention is right failure to make even one visit entitles them to terminate the contract however blameless Wickman might be. This is so unreasonable that it must make me search for some other possible meaning of the contract. If none can be found then Wickman must suffer the consequences. But only if that is the only possible interpretation.
If I have to construe cl 7 standing by itself then I do find difficulty in reaching any other interpretation. But if cl 7 must be read with cl 11 the difficulty disappears. The word 'condition' would make any breach of cl 7(b), however excusable, a material breach. That would then entitle Schuler to give notice under cl 11(a)(i) requiring the breach to be remedied. There would be no point in giving such a notice if Wickman were clearly not in fault but if it were given Wickman would have no difficulty in shewing that the breach had been remedied. If Wickman were at fault then on receiving such a notice they would have to amend their system so that they could shew that the breach had been remedied. If they did not do that within the period of the notice then Schuler would be entitled to rescind.
In my view, that is a possible and reasonable construction of the contract and I would therefore adopt it. The contract is so obscure that I can have no confidence that this is its true meaning but for the reasons which I have given I think that it is the preferable construction. It follows that Schuler were not entitled to rescind the contract as they purported to do...



Lord Wilberforce dissenting.
The second legal issue which arises I would state in this way: whether it is open to the parties to a contract, not being a contract for the sale of goods, to use the word 'condition' to introduce a term, breach of which ipso facto entitles the other party to treat the contract at an end.
The proposition that this may be done has not been uncriticised. It is said that this is contrary to modern trends which focus interest rather on the nature of the breach, allowing the innocent party to rescind or repudiate whenever the breach is fundamental, whether the clause breached is called a condition or not: that the affixing of the label 'condition' cannot pre-empt the right of the court to estimate for itself the character of the breach. Alternatively it is said that the result contended for can only be achieved if the consequences of a breach of a 'condition' (sc, that the other party may rescind) are spelt out in the contract. In support of this line of argument reliance is placed on the judgement of the Court of Appeal in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd.
My Lords, this approach has something to commend it: it has academic support. The use as a promissory term of 'condition' is artificial, as is that of 'warranty' in some contexts. But in my opinion this use is now too deeply embedded in English law to be uprooted by anything less than a complete revision. I shall not trace the development of the term through 19th century cases, many of them decisions of Lord Blackburn, to the present time; this has been well done by academic writers. I would only add that the Hong Kong Fir case, even if it could, did not reverse the trend. What it did decide, and I do not think that this was anything new, was that although a term... was not a 'condition' in the technical sense, it might still be a term breach of which if sufficiently serious could go to the root of the contract. Nothing in the judgements as I read them casts any doubt on the meaning or effect of 'condition' where that word is technically used.
The alternative argument, in my opinion, is equally precluded by authority. It is not necessary for parties to a contract, when stipulating a condition, to spell out the consequences of breach: these are inherent in the (assumedly deliberate) use of the word (Suisse Atlantique Societe D'Armement Maritime SA v NV Rotterdamsche Kolen Centrale per Lord Upjohn).
It is on this legal basis, as to which I venture to think that your Lordships are agreed, that this contract must be construed. Does cl 7(b) amount to a 'condition' or a 'term'? (to call it an important or material term adds, with all respect, nothing but some intellectual assuagement). My Lords, I am clear in my own mind that it is a condition, but your Lordships take the contrary view... I would only add that, for my part, to call the clause arbitrary, capricious or fantastic, or to introduce as a test of its validity the ubiquitous reasonable man (I do not know whether he is English or German) is to assume, contrary to the evidence, that both parties to this contract adopted a standard of easygoing tolerance rather than one of aggressive, insistent punctuality and efficiency. This is not an assumption I am prepared to make, nor do I think myself entitled to impose the former standard on the parties if their words indicate, as they plainly do, the latter. I note finally, that the result of treating the clause, so careful and specific in its requirements, as a term is, in effect, to deprive the appellants of any remedy in respect of admitted and by no means minimal breaches. The arbitrator's finding that these breaches were not 'material' was not, in my opinion, justified in law in the face of the parties' own characterisation of them in their document: indeed the fact that he was able to do so, and so leave the appellants without remedy, argues strongly that the legal basis of his finding--that cl 7(b) was merely a term--is unsound. I would allow this appeal.

There are no right answers to part I, if you think the breaches are "as a matter of law" material then you would argue that the Parties ought to observe the clause which expressly stated to be a condition.
However, if you want to argue that the parties may not have intended (the breaches are trivial as a matter of fact) then you argue that court intervention is legitimate.

(see Above: But if Schuler's contention is right failure to make even one visit entitles them to terminate the contract however blameless Wickman might be. This is so unreasonable that it must make me search for some other possible meaning of the contract. If none can be found then Wickman must suffer the consequences. But only if that is the only possible interpretation. -Lord Reid)

( See above: I note finally, that the result of treating the clause, so careful and specific in its requirements, as a term is, in effect, to deprive the appellants of any remedy in respect of admitted and by no means minimal breaches. The arbitrator's finding that these breaches were not 'material' was not, in my opinion, justified in law in the face of the parties'own characterisation of them in their document: indeed the fact that he was able to do so, and so leave the appellants without remedy, argues strongly that the legal basis of his finding--that cl 7(b) was merely a term--is unsound -Lord Wilberforce dissenting.)