Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. Condition Term that goes to root of the contract Hongkong Fir Shipping Company Ltd v Kawasaki Kisen Kaisha Ltd “the Hong Kong Fir” [1961] 1 Lloyd’s Rep 159; [1961] 2 Lloyd’s Rep 478 By michael Posted on August 3, 2011 Maritime Baltime charterparty – vessel unseaworthy – charterers not entitled to cancel One turns therefore to the contract, the Baltime 1939 Charter, of which Lord Justice Sellers has already cited the relevant terms. In short, the test for whether or not one may repudiate has now become, "does the breach deny the claimant the main benefit of the contract?" Secondly, the Court held that an innocent party cannot treat the contract as repudiated due to delays, however significant, if the breach falls short of a frustration of the contract rendering performance impossible. 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. Hong Kong Fir Shipping Ltd v Kisen Kaisha Ltd (1962) EWCA Civ 7. Where mutual covenants go to the whole of the consideration on both sides they are mutual conditions, the one precedent to the other. Clause 13, the "due diligence" clause, 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 charter-party 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. VAT Registration No: 842417633. It embraces obligations with respect to every part of the hull and machinery, stores and equipment and the crew itself. In Jackson v Union Marine Insurance there was no breach of the express warranty; but if there had been, to engraft the implied condition upon 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. The key issue is turn upon whether MicroHard Company Pte Ltd has breached any term in the Software Support Services Agreement it had signed with Ravi (the Customer). Registered Data Controller No: Z1821391. Hong Kong responded that Kawasaki were now the party in breach for wrongfully repudiating the contract. Charles Mitchell and Paul Mitchell (eds), Landmark Cases in … Common Law Procedure Act 1852. Case: Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7 Key terms: Square pegs and round holes Walker Morris LLP | The Commercial Litigation Journal … The contract may itself expressly define some of these events, as in the cancellation clause in a charter-party; but, human prescience being limited, it seldom does so exhaustively and often fails to do so at all. [14] (2) 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. Hong Kong Fir Shipping Co v Kawasaki Kisen Kaisha Ltd: CA 20 Dec 1961. So in The Hong Kong Fir, Lord Diplock held that a ship crew being too incompetent to properly operate the vessel did not breach the contract's "seaworthiness" term in a serious enough way as to allow for termination, because the charterers still got a working boat and could have replaced the … A term in the charterparty agreement required the ship to be seaworthy and to be "in every way fitted for ordinary cargo service." Hongkong Fir Shipping Company Ltd v Kawasaki Kisen Kaisha Ltd “the Hong Kong Fir” [1961] 1 Lloyd’s Rep 159; [1961] 2 Lloyd’s Rep 478 By michael Posted on August 3, 2011 Maritime Baltime charterparty – vessel unseaworthy – charterers not entitled to cancel Not merely because the contract is broken. The starting point for any consideration of the contractual status of any particular term of a contract has to be the judgment of Diplock LJ in Hongkong Fir Shipping v Kawasaki Kishen Kaisha [1962] 2 QB 26. The problems developed with the engine of the ship and the engine crew were incompetent. Hong Kong Fir Shipping hired out their elderly ship,[4] the "Hong Kong Fir", under a two-year time charter-party to Kawasaki Kisen Kaisha. Under the English sale of goods principles, a condition is a term whose breach entitles the injured party to repudiate the contract,[1] but a breach of warranty shall give rise only to damages. The problems 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? This case document summarizes the facts and decision in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26, Court of Appeal. On the facts, the delays, albeit serious and repeated, did not amount to a frustration of contract that entitled repudiation of the contract, but merely a breach allowing for damages. The cases referred to by Lord Justice Sellers illustrate this and I would only add that in the dictum which he cites from Kish v. Taylor (1912 Appeal Cases page 604, at page 617) 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". By this time, barely seventeen months of the two-year time-charter remained. At first instance, it was held that although the ship was a seaworthy vessel on delivery in Liverpool, Hong Kong Fir had not exercised due diligence to maintain the vessel in an efficient and seaworthy state. Hong Kong Fir Shipping v Kawasaki Kisen Kaisha [1962] 2 QB 26 Court of Appeal A ship was chartered to the defendants for a 2 year period. Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd which was held in 1961 is a landmark case in English contract law area. Nolan, Donal, Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd, the Hongkong Fir (May 30, 2008). It was an "innominate term". Any opinions, findings, conclusions, or recommendations expressed in this material are those of the authors and do not reflect the views of LawTeacher.net. This too was a judgment on demurrer but the principle was the same when the substance of the matter was in issue. This branch of the common law has reached its present stage by the normal process of historical growth, and the fallacy in Mr. Ashton Roskill's 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 lies, in my view, from a failure to view the cases in their historical context. Do you have a 2:1 degree or higher? However the crew were both insufficient in number and incompetent to maintain her old-fashioned machinery; and the chief engineer was a drunkard. 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. White and Carter (Councils) Ltd v McGregor, "a 25-year-old vessel called the "Antrim", which they renamed the "Hong Kong Fir", of some 5395 tons gross and 3145 tons net register", Law Reform (Frustrated Contracts) Act 1943, Universal Cargo Carriers Corporation v Citati, Maredelanto Compania Naviera SA v Bergbau-Handel GmbH, L Schuler AG v Wickman Machine Tool Sales Ltd, Golden Strait Corporation v Nippon Yusen Kubishka Kaisha, https://en.wikipedia.org/w/index.php?title=Hong_Kong_Fir_Shipping_Co_Ltd_v_Kawasaki_Kisen_Kaisha_Ltd&oldid=983505504, Court of Appeal (England and Wales) cases, Creative Commons Attribution-ShareAlike License, [1962] 2 QB 26, [1961] EWCA Civ 7, [1962] 1 All ER 474, This page was last edited on 14 October 2020, at 16:34. An intermediate term is a term of a contract that may give rise to a right of termination for breach depending on how serious the consequences are. Construction of contractual terms as ‘conditions’ and repudiatory breach of contract. In McFadden v Blue Star Lines [1905] 1 KB 607 it was stated that, to be seaworthy, a vessel must have the degree of fitness that an ordinarily careful and prudent shipowner would require his vessel to have at the commencement of a voyage, having regard to all possible circumstances. It introduced the concept of innominate terms, a category between "warranties" and "conditions". Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7 is a landmark English contract law case. Court held that breach was serious so K was allowed to rescind contract.) The ship in fact was not in good condition, and its repairs caused a lot of delays for the Defendant. 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. Kirby J agreed with the decision but argued strongly for the preservation of the traditional dualistic approach. What mattered was not whether a particular contract term was called a "warranty" or a "condition", but how serious was the breach of the term. The questions arose as to (1) whether the seaworthiness obligation constituted a ‘condition’ of contract, the breach of which entitles the party to repudiate; and (2) whether the breach caused delays of a sufficient degree so as to entitle the charterer to treat the contract as repudiated. Conditions, Warranties and Innominate Terms. Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd 2 QB 26 A ship was chartered to the defendants for a 2 year period. For instance, to take Baron Bramwell's example in Jackson v. Union Marine Insurance itself (at page 142), breach of an undertaking by a shipowner to sail with all possible dispatch to a named port does not necessarily relieve the charterer of further performance of his obligation under the charter-party, but if the breach is so prolonged that the contemplated voyage is frustrated it does have this effect. The document also includes supporting commentary from author Nicola Jackson. University. Copyright © 2003 - 2020 - LawTeacher is a trading name of All Answers Ltd, a company registered in England and Wales. Hong Kong Fir agreed to rent their ship to Kawasaki for 24 months and stated on the date of delivery that the ship was fitted or use in ordinary cargo service. [2] In this case, Diplock LJ proposed that some terms could lead either to the right to terminate a contract as a remedy, or to the mere entitlement to damages (without a right to terminate). This is the precise note for contract law course. CASE: Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (1962) 2 QB 26 p 341 (Shipping, delayed, intermediate terms, terms were breached. Charles Mitchell and Paul Mitchell (eds), Landmark Cases in … 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 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 a "warranty". Construction of contractual terms as ‘conditions’ and repudiatory breach of contract. Diplock LJ's judgment went as follows: Every synallagmatic contract contains in it the seeds of the problems 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? However, the trial judge found that this breach was not substantial enough to entitle the charterer to repudiate the contract. HONGKONG FIR SHIPPING COMPANY, LTD. v. KAWASAKI KISEN KAISHA, LTD. [1961] 1 Lloyd's Rep. 159 QUEEN'S BENCH DIVISION(COMMERCIAL COURT) Before Mr. Justice Salmon In the Hong Kong case, the issue was not whether the unseaworthiness was "serious" or "minor"; rather the question was whether the undoubtedly serious unseaworthiness had had an effect sufficiently grave to allow the charterer to repudiate. On the facts, the Court held that the seaworthiness and maintenance clause was not viewed as so fundamental so as to amount to a condition of the contract, but rather constitutes a term allowing damages. Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (1962) Kawasaki chartered the Hong Kong Fir from Hong Kong Fir Shipping Co for 24 months. 16th Jul 2019 Court held that breach was serious so K was allowed to rescind contract.) It was to sail in ballast from Liverpool to collect a cargo at Newport News, Virginia, and then to proceed via Panama to Osaka. The charterer’s repudiated the contract, alleging a breach of the obligations to deliver and maintain a seaworthy vessel. Discharge by breach - This is the precise note for contract law course. However, due to the fact that the engine room staff was inefficient and the engines were very old, the ship was held up for 5 weeks, and then needed 15 more weeks worth of repairs after the deal had been made. There was a charter-party between the plaintiff who was the owner of the vessel called Hongkong Fir and the defendant who was the charterer. And the Marine Insurance Act 1906 s 39(4) provides that "a ship is deemed to be seaworthy when she is reasonably fit in all respects to encounter the ordinary perils of the adventure insured.". 5 minutes know interesting legal matters Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 (UK Caselaw) This chapter discusses the decision of the Court of Appeal in The Hongkong Fir, one of the most important English contract cases of the 20th century. The fact that the emphasis in the earlier cases was upon 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 obligations; but the principle was applied early in the nineteenth century and without analysis to cases where the event relied upon 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;[11] Ford v Tiley;[12] Bowdell v Parsons. *You can also browse our support articles here >. Disclaimer: This work was produced by one of our expert legal writers, as a learning aid to help law students with their studies. The Defendant, after having problems with the bad state of the ship, notified the Plaintiff that the condition of the ship being in … Company Registration No: 4964706. Clause 1 of the contract obliged the owners to deliver a “seaworthy” vessel and Clause 3 further obliged them to maintain the vessel’s seaworthiness and good condition. In this analysis of the We also have a number of sample law papers, each written to a specific grade, to illustrate the work delivered by our academic services. 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