Peter purchased the backpack from Kathmandu Adventure Pty Ltd only on the condition that it be delivered on 1 May 2013. Kathmandu failed to deliver on that date and made a counter offer to deliver it a week later. The key issue in this case relates to whether a breach in an essential condition of a contract makes the contract voidable under the law and/or whether Peter could sue for damages. Expressed Terms are terms of a contract that are specifically agreed upon by the parties either in writing or verbally. Expressed terms can be classified according to their importance as either conditions or warranties. A condition is an essential term of the contract. Where there is a breach of a condition, the innocent party can rescind (terminate) the contract and/or claim damages. A warranty is a minor issue that does not really effect the performance of the contract and where there is a breach of a warranty, the innocent party can only claim damages. Whether a term is a condition or a warranty depends on the intention of the parties. A counter offer can only be made upon agreement by both parties and forms the basis of a new contract. In this case, there is an expressed condition that the backpack be delivered to Peter on 1 May 2013. It made up a major part of the intention of the contract as Peter was due to leave for overseas the next day and therefore could not be regarded as a warranty. This is similar to the Associated Newspapers v Bancks (1951) case known as the “Ginger Meggs” Case.
CASE STUDY SOLUTION 4
Peter buys a back pack from Kathmandu Adventures Ltd. Delivery of the backpack is to be made on 1 May 2013, the day before Peter leaves on his overseas holiday. Kathmandu Adventures Ltd fails to deliver the backpack on the agreed date and says it will take a further week. What rights does Peter have against Kathmandu Adventures Ltd?
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J.CALLANDER JUNE 2015
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ISSUE
R
RULE/LAW
A
Hale Waihona Puke APPLICATION OF In this case a term that required a comic strip to be prominently displayed was a RULE/LAW condition. When it was breached the innocent party could terminate the contract TO THE ISSUE immediately. Bancks, the creator of a comic strip character contracted to supply a comic strip in a Sunday newspaper, Associated Newspapers, on the condition that it was on the front page of the comic strip section. Because of a newsprint shortage the newspaper put it on page 3 for three Sundays in a row. The High Court of Australia held that the newspaper had breached a condition as the location of the cartoonist’s drawing was vital for the cartoonist’s popularity. Based on the facts, it is likely that a Court would make this contract voidable due to a breach of an essential condition in the contract and that Peter could rescind the contract and/or sue for damages. Peter was leaving for overseas on the 2 May 2013 and needed to take the backpack with him. Kathmandu’s counter offer of delivering it two weeks later would not make the contract valid unless Peter agreed. CONCLUSION