Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd PDF

Preview

Summary

discharge by breach/frustration, important aspect of contract law...

Description

Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd Discharge by Breach/Frustration – Intermediate Terms Name of Case Citation and Court Material Facts

Legal Issue

Relevant Law

Application of Law to the Facts

Conclusion

Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 Court of Appeal in England The Hongkong Fir Shipping Co chartered one of its ships for a two-year period to Kawasaki. The charter party agreement provided that the ship was to be made available to the charterers at Liverpool since it was ‘in every way fitted for ordinary cargo service’, and that the owners were to maintain the vessel ‘in a thoroughly efficient state in hull and machinery during service’. After delivery the ship sailed to Virginia to load coal and then on to Osaka. The trip lasted about 8.5 weeks, but then a further 5 weeks was taken up with repairs. The vessel was berthed at Osaka for 15 weeks to render it seaworthy after considerable mechanical breakdowns and corrosion. The charters repudiated the contract for the long delays, alleging the ship was not seaworthy, and claimed damages for breach of contract. The ship owners took legal action for wrongful repudiation of the agreement by the charterers. Whether the term in the charter party agreement relating to the ship’s seaworthiness was a condition, breach of which entitled the charterers to terminate. The question whether an event is the result of the other party’s breach cannot be answered by treating all contractual undertakings as either ‘conditions’, the breach of which gives rise to an event which relieves the innocent party of further performance of his obligations, and ‘warranties’, the breach of which does not give rise to such an event. There are many contractual undertakings of a more complex character which cannot just be categorised as being conditions or warranties. 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 innocent party of the whole benefit of the contract. There are numerous decisions as to what can amount to ‘unseaworthiness’ which makes it one of the most complex of contractual undertakings. The issue is not solved by debating whether the owners’ express or implied undertaking to tender a seaworthy ship as a ‘condition’ or ‘warranty’. It is a term where a breach of it may give rise to an event which relieves the charterer of further performance if he so elects, and another breach which may not give rise to such an event but may entitle him only to monetary compensation as damages. Kawasaki could not say when they terminated the contract that they were deprived of the essential benefit of the contract because they had it for 2 years, they only lost 20 weeks for which damages would be possible Held that the breach by the ship owners did not justify termination by the charterers, with the consequence that the repudiation by the charterers was wrongful. Sellers LJ and Upjohn LJ construed the term as a warranty. Diplock LJ categorised the term as an intermediate term and held that the breach of it was not sufficiently serious to give rise to a right to terminate....