Contract Law 1 (B) - Essay Example

During the process of enforcing the terms of a contract therefore, courts are guided by the agreement between the parties as it is reflected in the wording of the contract and the terms contained therein, subject to the rules of offer, acceptance and communication of acceptance of the terms of contract4. When the obligations of the parties remains unclear, the Court may determinate that it is “innominate” - for example the inclusion of terms which can neither be classified as warranties or as conditions and where the meaning is unclear so that it is difficult to determine a breach of such terms.

Earlier, where the terms of a sales contract were concerned, it was assumed that they would have to be specified as a part of warranties and conditions before a breach could be determined, however decisions contrary to this principle have been given in subsequent cases to tackle a breach3a. Therefore the Courts will determine whether there has been a breach by applying the consequences of the breach test that was set out in the case of Hong Kong Fir Shipping v Kawasaki Kaisen Kaisha5 according to which the “legal consequences of a breach…..depend upon the nature of the event to which the breach gives rise and do not follow automatically….

”6 Where commercial contracts are concerned, contract formation is a more haphazard process. Therefore breaches arising out of incomplete contract formation where terms are implied, have been revised to be just terms under the Supply of Goods and Services Act 1982, rather than conditions as was earlier indicated in the Supply of Goods and Services Act 1979. Rowland and Campbell point out the difficulties in enforcing contracts and making a determination of the exact extent to which exploitation of the copyright is permitted under the terms of licenses and sales for software.

7 According to Vineet