The House considered a contractual provision which provided for the cancellation of a contract for the sale of soya beans on the happening of various events
Held: Lord Wilberforce said that there were three factors that determined whether a notice provision was a condition precedent: (i) the form of the clause itself; (ii) the relation of the clause to the contract as a whole; and (iii) general considerations of law; and ‘As to (i) the clause is not framed as a condition precedent. The ‘cancellation’ effected by the first sentence is not expressed to be conditional upon the second sentence being complied with: it operates automatically upon the relevant event. Learned Counsel for the buyers invited your Lordships to read cl.21 as if the first sentence were linked with the second by such words as ‘provided that’ – an argument which must surely support the view that without such words, the second sentence does not attain condition status. Moreover, the generality of the words ‘without delay’ tells against the buyer’s contention. If a condition were intended a definite time limit would be more likely to be set. Then, as to (ii), provisions elsewhere in the contract . . suggest that the second sentence is not intended as a condition. (iii) Automatic and invariable treatment of a clause such as this runs counter to the approach, which modern authorities recognise, of treating such a provision as having the force of a condition (giving rise to rescission or invalidity), or of a contractual term (giving rise to damages only) according to the nature and gravity of the breach. The clause is then categorised as an innominate term . . In my opinion the clause may vary appropriately and should be regarded as such an intermediate term: to do so would recognise that while in many, possibly most, instances, breach of it can adequately be sanctioned by damages, cases may exist in which, in fairness to the buyer, it would be proper to treat the cancellation as not having effect. On the other hand, always so to treat it may often be unfair to the seller, and unnecessarily rigid.’
Judges:
Lord Wilberforce
Citations:
[1978] 2 Lloyds Rep 109
Jurisdiction:
England and Wales
Cited by:
Cited – Persimmon Homes (South Coast) Ltd v Hall Aggregates (South Coast) Ltd and Another TCC 10-Oct-2008
The parties had agreed for the sale of land under an option agreement. The builder purchasers now sought to exercise rights to adjust the price downwards.
Held: The provisions had been intended and had achieved a prompt and binding settlement . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 07 May 2022; Ref: scu.277761