Innominate Terms CASES

In English contract law, an innominate term (also called an intermediate term) is a promise that is neither a strict “condition” nor a mere “warranty”. If it is broken, the remedy depends on the seriousness of the consequences. A trivial or easily curable breach yields damages only; a serious breach that deprives the innocent party of substantially the whole benefit of the contract permits termination (treating the contract as at an end) plus damages. This approach comes from the leading authority often summarised as the “Hong Kong Fir” test.

Definition and Principles

With an innominate term, the court classifies the breach after it happens by asking what its consequences are for the bargain. The question is whether, judged objectively and in context, the breach goes to the root of the contract—so that the innocent party is substantially deprived of what it contracted for. If yes, the breach is repudiatory and termination is available; if not, the remedy is damages only. Factors include the gravity and likely duration of the breach, the possibility and speed of cure, and how far the promised performance has been undermined.

How It Differs From Conditions and Warranties

Conditions are terms where any breach (however small) gives a right to terminate (common with certain time clauses in mercantile contracts). Warranties are minor terms: breach yields damages only. Innominate terms sit between these poles and avoid crude, all-or-nothing outcomes. Labels used by the parties help but are not always decisive: calling something a “condition” will usually be respected if the context shows the parties genuinely meant any breach to be termination-entitling, but the courts will not let an inapt label produce an absurd or commercially irrational result.

Time, Cure and Continuing Performance

Time stipulations can be conditions (for example, “time is of the essence” for shipment dates in some mercantile contracts), but in many service and long-term contracts timing and quality promises are innominate. The possibility of prompt and effective cure matters: a temporary breakdown that is swiftly fixed may be non-repudiatory; a persistent failure or long outage in a mission-critical system may cross the threshold.

Common Examples

• Long-term service contracts (IT or logistics): repeated outages or missed service levels that cripple the customer’s operations may justify termination; isolated, quickly remedied breaches usually do not.
• Construction and professional services: slippage and defects can be non-repudiatory if put right without undermining the project, but wholesale incompetence or prolonged delay that defeats the project’s purpose can be repudiatory.
• Shipping/charter: unseaworthiness causing very substantial delay may allow termination; minor defects promptly rectified will not.
• Supply contracts: late or non-conforming instalments: one failure may be remediable; a pattern that destroys confidence in future performance can justify bringing the contract to an end.

Legal Implications

• Risk of wrongful termination: calling a non-repudiatory breach “repudiatory” and purporting to terminate can itself be a repudiation. Parties should evaluate consequences carefully.
• Affirmation: if the innocent party elects to continue after a repudiatory breach (for example, by insisting on performance without reserving termination rights), it may lose the right to terminate for that breach, though damages remain.
• Drafting to reduce uncertainty: parties often designate key obligations as “conditions”, make time “of the essence”, or include “material breach” and cure-period clauses to pre-agree when termination is permitted.
• Statutory nuances: in some sales contexts, statute moderates strict termination rights for minor breaches (for example, treating slight breaches as warranties), but the innominate approach still informs modern analysis outside those carve-outs.

Practical Importance

When advising, focus on consequences, not labels: assemble evidence about how the breach affected the bargain (duration, severity, prospe