¹ [1963] 2 Q.B. 683; [1963] 2 All E.R. 433. The case will hereafter be called the Charterhouse case. All references for dicta will be to the All England Reports both for this and other cases in order to make clear by means of the lettering system employed the part of the page to which reference is made.

The legal point had previously arisen in Handley v. Marston (1962) 106 S.J. 327Google Scholar. However, in that case the Court of Appeal found that there was no “fundamental breach,” and consequently it was not necessary to decide whether the exemption clause had been kept alive merely by reason of the defendant not repudiating.

² The following remarks of Tarski though about science are nevertheless relevant to analysis of legal reasoning and the development of social welfare which is one of the aims of justice: “it is inimical to the progress of science to measure the importance of any research exclusively or chiefly in terms of its usefulness and applicability. We know from the history of science that many important results and discoveries have had to wait centuries before they were applied in any field.… I do not think that a scientific result which gives us a better understanding of the world and makes it more harmonious in our eyes should be held in lower esteem than, say, an invention which reduces the cost of paving roads, or improves household plumbing.” “Semantic Conceptions of Truth” reported in Semantics and the Philosophy of Language (ed. Linsky), pp. 41–42. Sed quaere—should it be held in higher esteem?

³ An ambiguous terminology and inadequate concepts may help to prevent a doctrine of precedent from becoming too rigid. But the prevention of rigidity is better achieved by reform of the doctrine of precedent than by perpetuation of imperfect analysis.

⁴ p. 442 C.

⁵ It will be recalled that s. 11 (1) (a) recites, “Where a contract of sale is subject to any conditions to be fulfilled by the seller, the buyer may waive the condition or may elect to treat the breach of such condition as a breach of warranty and not as a ground for treating the contract as repudiated.”

⁶ [1962] 2 Q.B. 508; [1961] 2 All E.R. 281. This case will hereafter be called the Apps case. There are a number of cases in which the Yeoman Credit Co. Ltd. appear as plaintiffs.

⁷ Holroyd Pearce L.J. at p. 289 I; Harman L.J. at p. 291 I; Donovan L.J. at p. 292 H. See also Pearson L.J. in the Astley case (q.v.) at p. 44 G.

⁸ [1953] 1 W.L.R. 1468; [1953] 2 All E.R. 1471. This case will hereafter be called the Hanscomb case.

⁹ At p. 1473 C.

¹⁰ Nor has there been much juristic consideration. Cheshire and Fifoot continue to repeat, without reference to the Hanscomb case, the statement in their early editions that “condition” must be distinguished from the fundamental object of the contract; they rely on the peas and beans dictum of Lord Abinger in Chanter v. Hopkins. Melville in (1956) 19Google Scholar M.L.R. 26 gives the fullest consideration to Lord Devlin's dictum. But even he does not consider the appropriateness of applying the word “conditions” to promises. His discussion does not, with respect, go beyond my consideration of the problem in (1937) 15 Can.B.R. 764 et seq.

¹¹ At p. 483 F.

¹² [1956] 1 W.L.R. 936; [1956] 2 All E.R. 866, 869 C: “these are all comprehended by the general principle that a breach which goes to the root of the contract disentitles the party from relying on the exempting clause.” Guest in (1961) 77 L.Q.R. 98 deals under the title of “Fundamental Breach of a Contract” with “fundamental terms” without any suggestions of the concepts being different.

¹³ At pp. 444 E and 444 H.

¹⁴ At pp. 444 F and 441 I.

¹⁵ [1963] 1 W.L.R. 584; [1963] 2 All E.R. 33, hereafter called the Astley case.

¹⁶ See per Lord Reid in Gollins v. Gollins [1963] 2Google Scholar All E.R. 966, 973 F: “we base ourselves on a fiction and that is bound to lead to trouble.”

¹⁷ Treitel states: “Although the two phrases ‘fundamental breach’ and ‘breach of a fundamental term’ are used indiscriminately, the two concepts appear to be distinct.” Law of Contract (1962), p. 148.Google Scholar Treitel also has a concept (see p. 144) of “acting outside the contract”: this, however, is not a distinct concept: he himself relates it to “the true construction of the contract.”

A valuable article on “Warranty, Condition and Fundamental Term” by Reynolds ((1963) 79 L.Q.R. 534) has appeared after this article was written. He adopts the view opposed to that of Treitel and myself, but in accordance with Lord Denning, in thinking that there is but one doctrine of fundamental breach; the differences of language do not preclude a unity of doctrine (see particularly note 59). However, he has produced no arguments which have been able to convince me that the view contended for in the text of this article is incorrect. It is noteworthy that counsel in the Charterhouse case has considered that “fundamental breach” is inapt to describe the true doctrine. “As a matter of terminology it is more correct to speak of a fundamental condition rather than a fundamental breach” [1963] 2 Q.B. at p. 697.

¹⁸ 1922 S.C.(H.L.) 192.

¹⁹ The buyer was in consequence held to be entitled to compensation notwithstanding the exemption clause. The case furnishes an early example of the modern practice whereby a so-called guarantee operates as an exemption clause for the benefit of the seller.

²⁰ [1961] 2 All E.R. at pp. 289 I and 290 A.

²¹ Ibid. 292 C. Both Holroyd Pearce and Harman L.JJ. speak also of there having been a “breach of a fundamental condition.”

²² [1953] 1 W.L.R. 1026; [1953] 2 All E.R. 679. Somervell L.J. speaks as if he considers a question of fundamental breach as equivalent to the breach of an implied fundamental term: p. 683 G.

²³ [1942] A.C. 356, 373.

²⁴ [1956] 2 All E.R. at 869 C.

²⁵ In (1937) 15 Can.B.R. 764 I suggested the use of the concept of definition of contract goods; such a concept serves to distinguish fundamental terms from other terms of a contract of sale or hire.

²⁶ In The Albion [1953] 2Google Scholar All E.R. 679, a claim that an exception clause did not apply was not accepted by the court. The reasoning of the judgment of the court, delivered by Somervell L.J., was based on (a) the absence of fundamental breach; (b) the construction of the exemption clause. Reference is made to an argument treating fundamental breach as breach of an implied term (683 G).

²⁷ [1956] 2 All E.R. at p. 869 C. The language of “fundamental breach” was used in the Judicial Committee of the Privy Council in Boshali v. Allied Commercial Exporters Ltd. (1961) 105 S.J. 987Google Scholar, where the opinion of the Board (Lords Hodson, Guest and Devlin) was delivered by Lord Guest. It is also the language of Willmer, L.J. in Handley v. Marston (1962) 106 S.J. 327Google Scholar.

²⁸ [1942] A.C. at p. 373.

²⁹ “The Effect of Anticipatory Repudiation ” [1962] C.L.J. 213, an article based on White & Carter Ltd. v. McGregor [1962]Google Scholar A.C. 413; [1961] 3 All E.R. 1178, hereafter called McGregor's case.

³⁰ Heyman v. Darwin's Ltd. [1942] A.C. at p. 373.Google Scholar In this passage Lord Macmillan equates repudiation with total breach. Dealing with the effect of repudiation he says: “The contract stands but one of the parties declined to fulfil his part of it. There has been what is called a total breach or breach going to the root of the contract, and this relieves the other party of any further obligation to perform what he has for his part undertaken.”

³¹ McGregor's Case [1961] 3 All E.R. at p. 1181Google Scholar C.

³² Nienaber ([1962] C.L.J. p. 224, note 61) employs the word repudiation to denote the concept described in the above text. He speaks of “anticipatory repudiation” not only to distinguish repudiation before the time for performance has arrived from repudiation at or after that time, but also to distinguish repudiation from “actual breach”—the breach of a promise. Eepudiation for him is not the breach of a promise. He assumes that promises are undertakings to act or forbear: and that a breach of promise is a failure to carry out the undertaking. He refers to Lord Wrenbury's analysis of “anticipatory breach” in Bradley v. Newson, Sons & Co. [1919]Google Scholar A.C. 16, 53. There Lord Wrenbury said: “He is recalling or repudiating his promise, and that is wrongful. His breach is a breach of a presently binding promise, not an anticipatory breach of an act to be done in the future.” This restates the doctrine solvendum in futuro, debitum in praesenti. But repudiation of a promise is different from failure to carry out the undertaking in a promise: and to call both by a single name may produce confusion: Sane commodius erat singulas causas singulis appellationibus distingui. Nienaber useB the phrase “breach of contract” to cover both breach of promise and repudiation. It is clearer to say that damages may be obtained both for breach of promise and for repudiation. We still lack a clear analysis and a consistent terminology for elementary contractual notions. Nienaber is, of course, justified by judicial usage: thus Lord Keith in McGregor's case said: “Repudiation is nothing but a breach of contract” (1187 G).

³³ Hence the often made equation of “total breach” with “repudiation.” “Total breach.” of course, usually manifests an intention not to perform, and since objective considerations dominate in our law of contract when there is “total breach” there will normally be “repudiation.” But there may be circumstances in which the breach does not manifest an intention not to perform. Nienaber rightly distinguishes repudiation from other breaches of contract by pointing out that “repudiation alone is ever said to be entirely a matter of intention.” [1962] C.L.J. 223, citing Freeth v. Burr (1874) L.R. 9 C.P. 208; Consorzio Veneziano di Armamento v. Northumberland Shipping Co. Ltd. (1919) 88Google Scholar L.J.K.B. 1194.

³⁴ The phrase is Nienaber's used by him to indicate another characteristic for distinguishing repudiation from other breaches of contract. He cites Johnstone v. Milling (1886) 16 Q.B.D. 460; Re Rubel Bronze Co. Ltd. & Vos [1918] 1 K.B. 315Google Scholar.

³⁵ There is no suggestion that there was a bargain with consideration, and that the borrower was offering to repair in return for the postponement of payment of instalments.

³⁶ See [1963] 2 All E.R. at pp. 437 B, 444 G, 441 E.

³⁷ At p. 442 E.

³⁸ The doctrine of Morris v. Baron [1918]Google Scholar A.C. 1, and British and Beningtons v. N.W. Cachar Tea Co. [1923]Google Scholar A.C. 48, avers that for the purpose of s. 4 of the Sale of Goods Act an alteration of a contract does not necessarily constitute the entering into a new contract in substitution for the old contract, but may constitute a mere variation. But this doctrine does not apply where the alteration is fundamental.

³⁹ (1929) 34 Ll.L.R. 306.

⁴⁰ Lomi v. Tucker (1829) 4 C. & P. 15; Okell v. Smith (1815) 1 St.N.P. 107.

⁴¹ If “in purported performance” meant that the hire of the horses was to be on the same terms as the hire of the tractor, then the exception clause would be introduced into the new contract. The Charterhouse case could have been decided on the basis that the new contract did not contain an exception clause.

⁴² Nienaber points out that plaintiffs used to plead both a failure to perform and a refusal to perform. The breach, as he says, was the failure, but by pleading a refusal it was made clear that the failure was no mistake.

⁴³ McGregor's case at p. 1187 G.

⁴⁴ The description “graphic phrase” is Lord Keith's in McGregor's case. The phrase is from the judgment of Asquith, L.J. in Howard v. Pickford Tool Co. [1951] 1 K.B. 417Google Scholar. The principle is expressed less figuratively by Lord Evershed (at p. 420): “if the conduct of one party amounts to a repudiation, and the other party does not accept it as such, but goes on performing his part of the contract and affirms the contract, the alleged act of repudiation is wholly nugatory and ineffective in law.”

⁴⁵ Nienaber regards the development of the doctrine that the innocent party could sue for a breach as inconsistent with the doctrine of an offer to rescind. [1962] C.L.J. at p. 220 et seq. But the older doctrine survives not only in the language of acceptance of repudiation, but also in many judicial dicta.

⁴⁶ Heyman v. Darwin's Ltd. [1942] A.C. at p. 373.Google Scholar

⁴⁷ The following situation may be envisaged. A seller of goods to be delivered at a future date announces he will not deliver. The buyer says he will require delivery, but to safeguard himself against the possibility of the seller's non-delivery, he enters into a contract with another merchant for delivery of similar goods at the due date with power to cancel on payment of £x if the seller delivers. The seller delivers, the buyer cancels and pays the other merchant the £x. If the substituted contract is reasonable cannot the buyer claim the £x as damages for the unaccepted repudiation?

⁴⁸ 37 Can.B.R. 535 (1959).

⁴⁹ [1962] 2 Q.B. 26; [1962] 1 All E.R. 474. This case will hereafter be called the Hong Kong case.

⁵⁰ At p. 487 D.

⁵¹ At p. 483 D.

⁵² [1963] 2 All E.R. at p. 46 I.

⁵³ Per Diplock, L.J. in the Hong Kong case at p. 487Google ScholarH.

⁵⁴ [1953] 2 All E.R. at 1473 C. In the Apps case Davies L.J. said: “Not every breach of condition, not every sort of unfitness would amount to a breach of what has been called the fundamental condition” [1961] 2 All E.R. at p. 292 H.

⁵⁵ This criticism enables one to state the nature of a fundamental term as opposed to a condition. I have ventured in 15 Can.B.R. at p. 264 (1937) to describe the nature of “the definition of contract goods”—the subject-matter of what is now called the fundamental terms of such a contract. Stoljar's criticism in (1951) 15 M.L.R. at p. 443 appears to me to be misconceived. He appears to be asking for a “closed definition” having the character of the precise terms of a medical prescription. No criterion is to be expected which will enable a mechanical judgment to be performed. Stoljar's own use of the epistemological distinction between “knowledge by acquaintance” and “knowledge by description” seems to me more adapted to a psychological study of learning by an individual than a legal study of transactions. We cannot in the latter study usefully draw a distinction between “knowledge of things” and “knowledge of truths about things.” The basic problem is what is the “thing” which is the subject-matter of the transaction.

⁵⁶ See infra, p. 80 and notes 64 and 65.

⁵⁷ This statement in Appendix II, note II, to Chalmers' Sale of Goods Act, 1893 follows upon a definition of condition which corresponds with the “conveyancing” distinction, i.e., the definition in the American Restatement based on the work of Williston and Corbin, and which is inconsistent with the use of the word in the Act where it applies to one of two kinds of “contractual undertakings.” In this note Chalmers also says: “Though the Act uses the term condition, it does not define it. The definition belongs to the general law of contract” (a passage not cited by Diplock and Upjohn L.JJ.). The definition in this note is: “The term ‘condition’ as applied to contracts appears to mean indifferently (a) an uncertain event on the happening of which the obligation of the contract is to depend, and (b) the stipulation in the contract making its obligations depend on the happening of the event.” This definition by use of the phrase “the obligations of the contract” obscures the fact that one, some, or all of the obligations in a contract may be dependent on a condition.

⁵⁸ See Art. 665, Williston on Contract (1936) 2nd edn. Vol. 3 p. 1911 (unaltered from 1st edn.).Google Scholar

⁵⁹ e.g., Lach v. Cahill, 85 Atl. (2nd) 481.

⁶⁰ Corbin, Contracts (1951) Vol. 3, p. 521; (1953) One Vol. ed., p. 592.

⁶¹ 15 Can.B.R. 311, p. 312 (1937). I drew a distinction between limitations and conditions. This has not yet been the subject of judicial consideration.

⁶² It is convenient to distinguish between the condition annexed to a promise and the promise: but such a separation overlooks the essential unity of promise and condition. The promisor promises to act in specified circumstances—the condition is part of the specification. It will be noted that since we are considering contractual terms we are using the word “condition” to refer not to the event specified but to the clause specifying the event.

⁶³ In Nelson v. Dundee East Coast Shipping Co., 1907 S.C. 927Google Scholar, where the provision in the cancellation clause referred to non-arrival of the ship at the port of loading within seven days of her expected readiness, Lord McLaren said (at p. 934): “If it could be shown that the shipowners have used their best endeavour and that the delay was due to unavoidable accident or perils of the sea, I should be of opinion that no damages were due. The contract would be cancelled, but damages would not be due.” The shipowners had not sent the ship to the port of loading, but had chartered it to other charterers. This was the breach of a promise to which no condition was annexed. The cancellation clause constitutes a condition annexed to the charterers' obligation to load. This is clearly stated in the judgment of Kennedy, L.J. in Moel Tryvan Ship Co. v. Andrew Weir [1910] 2 K.B. 844Google Scholar, 856, where a similar cancellation clause was contained in the charterparty. He said that the shipowner's right “is to have the ship loaded by the charterers after her arrival at the loading port as and with the cargo, and within the time fixed by the charterparty, subject always to a stipulated risk of defeasance, namely that if the ship's arrival is delayed beyond an agreed date the charterers' obligation to load ceases to be enforceable against them. In that case they may load the ship as they please. I seek in vain for any words in the cancelling clause… which entitles the shipowner to say that the charterers are not to have the full benefit of the undertaking of the shipowners that the ship shall proceed to the port of loading because she failed to get there at the named date.”

⁶⁴ [1960] A.C. 115; [1959] 3 W.L.R. 1011; [1959] 3 All E.R. 1910, noted (1960) 23 M.L.R. 434. The Board relied on Re Sandwell Park Colliery [1929] 1 Ch. 277Google Scholar, in which Maugham J. said: “There is no promise or undertaking by the vendor that the condition will be fulfilled.” In this case, however, the “condition” was not an act to be performed by the vendor.

⁶⁵ [1960] A.C. 44; [1960] 1 All E.R. 117; noted (1960) 23 M.L.R. 550.

⁶⁶ e.g., in the Apps case, Holroyd Pearce L.J. at [1961] 2 All E.R. 289 I, Harman L.J. at 291 I, Donovan L.J. at 292 H: in the Astley Case [1963] 2 All E.R. Pearson, L.J.Google Scholar at 44 G.

⁶⁷ Confusion is increased by the provision of s. 13 that in sale by description there is an “implied condition that the goods shall correspond with the description.” Not all “description” is fundamental.

⁶⁸ Recent discussion has been concerned with exemption clauses. But the operation of rejection clauses is also relevant. A usual type of rejection clause is: “Buyers shall not reject the goods herein specified but shall accept or pay for them in terms of contract.” An exemption clause prevents a “specification” from having any contractual effect; a rejection clause prevents it operating as a condition. See (1937) 15 Can.B.R. at p. 780 et seq.

⁶⁹ Wedderburn [1957] C.L.J. 16 criticises the adoption for the criterion of “fundamental” of the phrase “going to the root of the contract.”

⁷⁰ Wallis v. Pratt [1910]Google Scholar 2 K.B. 1003, 1014; [1911–13] All E.R. 992 I.