Chapter 5: Guidance for end of chapter questions

Chapter 5: Guidance for end of chapter questions

Positive terms


Tennis star Tim Lobem agreed to act as coach to Buster Slasher, the Managing Director of Slasher Rackets Ltd. The terms of the contract state:

'Lobem will not play in any doubles tournament except as Slasher's partner. Lobem will use only equipment manufactured by Slasher Rackets Ltd.'

Lobem and Slasher entered the Kinky Cola International Tournament but on the day of the first round of doubles, Slasher was taken ill and unable to play. Lobem accepted an invitation to play with his good friend Si Borg and, by mistake, played with a racket manufactured by SuperServe Ltd. Slasher has told Lobem that he is terminating the contract. Advise Lobem.


Paragraph 1 - Introduction

You could note two preliminary points in a brief introductory paragraph:

  1. The question quotes 'the terms of the contract' and so the distinction between representations and terms is not relevant in this question; and
  2. Slasher is attempting to terminate the contract and so the warranty/innominate terms/conditions distinctions is important and so a brief explanation of this distinction would be useful along with an explanation of the circumstances in which Slasher will be entitled to terminate (i.e. if the term broken is a condition or innominate term (and the breach is sufficiently serious in the latter case)).

You can then assess the terms of the contract in order: firstly the term that Lobem will not play in any doubles tournament except as Slasher's partner; and secondly, the term that Lobem will use only equipment manufactured by Slasher Racquets Ltd.

Paragraph 2 - Is there a breach of contract?

This question is crucial because the questions of whether Slasher can terminate the contract and what types of terms the contract contains are irrelevant if Lobem has not breached a term of the contract.

It may be obvious on first sight that Lobem has breached the terms; he promised not to play doubles with anyone but Slasher but then played with Si Borg.  However, this is where the importance of implied terms is relevant - even though the contract does not expressly contain a term allowing Lobem to play with Si, it does not mean that such a term is not contained in the contract.  You could briefly explain how terms may be implied in fact (The Moorcock).

The term is absolute, perhaps too absolute.  It is arguable that business necessity requires that a term allowing Lobem to play doubles with someone else when Slasher is unavailable (e.g. because of illness) should be implied.  Without such a clause, Lobem would be unable to ply his trade successfully (a restriction which in itself can be unlawful).  On the other hand, Lobem may generally be a singles player and Slasher may have wanted to reserve for himself the prestige of playing doubles with a leading singles player.  You can think of many other arguments but you should be cautious about implying a term because the courts rarely imply terms in fact.  Also, remember that the question is effectively over if there is no breach of contract; you need to allow for the possibility of a breach of contract so that you can provide a fuller answer (the examiner probably did not set the question expecting a two paragraph answer).

Paragraph 3 - First Term: Lobem will not play in any doubles tournament except as Slasher's partner

Is this a condition, does it go to the root of the contract?  The question is usually easier to state than to answer but there is little evidence that this term is central to the contract.  The term is not expressed as a condition and from the first line of the question it appears as though the contract is essentially about coaching and not playing doubles together.  Moreover, the contract is not a standard one and so arguments relating to certainty (as in relation to time clauses in Bunge Corporation v Tradex) are not as persuasive in this context.

This does not automatically mean that the term is a warranty as it may be an innominate term (Hongkong Fir Shipping Co. Ltd v Kawasaki KK Ltd.).  The consequences of the breach in this case do not appear to be severe and do not deprive Slasher of substantially the whole benefit of the contract.  The alleged breach (by playing with Si Borg) is therefore unlikely to give Slasher a right to terminate the contract and he will be limited to a claim in damages.

Paragraph 4 - Second Term: Lobem will use only equipment manufactured by Slasher Racquets Ltd

Again, there is little evidence to suggest that this term is central to the contract, although you may argue that the contract is really more about sponsorship and publicity rather than coaching but there is no hard evidence to back up this natural assumption.  It would be useful to know what the fee was - is this fee consistent with coaching (i.e. a relatively small (hourly) fee) or sponsorship (i.e. a large performance related fee).

Again, it would be wise to consider the possibility that this clause may be an innominate term, especially given that certain breaches could certainly justify termination (for instance, if Lobem turned up on court clad head to foot in SuperServe kit).

You should also ensure that an examiner understands that you are not tricked by the fact that Lobem took the wrong racquet on court 'by mistake.'  This does not excuse him from liability for breach of contract because contractual obligations are strict liability; i.e. you are liable if you do not perform your promise, even if your failure to perform is not your fault (unless the doctrine of frustration saves you - see chapter 10).

It is, therefore, likely that the second term is an innominate terms also and the breach by Lobem is not sufficiently serious to allow Slasher to terminate.  Slasher will therefore be limited to a claim in damages.

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