Definitions (3)

CONDITION:

A condition , on the other hand is a term that relates to an important aspect of the agreement : it ' goes to the root ' . if such a term is broken the victim has a right , not only to claim damages , but also to avoid the contract. You also recall that the words ' condition ' and ' warranty ' , though they used in insurance , do not have the same meaning as in the general law of contract. In particular , a warranty in insurance is not a minor term of the contract , but one of the greatest importance. Of course , the term of an insurance contract cover all sorts of things including , for example : payment of the premium , rights of cancellation and application of arbitration in the event of a dispute . these provisions may be described as ' condition ' or even ' warranties ' in the contract . however we are concerned mainly with terms that impose obligation on the insured i.e. those that require the insured to do something ( or not do something ) as their part of the bargain. Condition: Rather confusingly , warranties themselves have sometimes been described as types of conditions , however , here we mainly use the word to describe terms , other than warranties , that impose an obligation on the insured , condition can also classified in various ways. Condition precedent to the contract: You should note that a condition precedent to the contract is not , as is sometimes suggested , a condition that must be met before the contract ( as apposed to the cover ) can come into effect - by definition , a non-existent contract cannot have any terms or condition . in this sense , all terms and conditions are ' subsequent ' to a contract. A condition precedent to the contract is one which states , in one form of words or another , that the policy as a whole will become void , or cover will not attach. If the insured fails to comply with the term in question. For example , a life insurance policy may contain a condition that cover will not come into effect until the premium is paid . If such a term is not complied with the insurance contract will become void ab initio , that is , the contract will be cancelled retrospectively and the insurer will be deemed never to have been no risk. A condition precedent may also impose a continuing obligation on the insured . for example motor policies usually contain a clause that requires the insured to maintain the vehicle in a roadworthy condition at all times . Conditions of this sort have much

the same effect as continuing warranties , and some writers have suggested that there is no difference and the two terms refer to exactly the same thing. Condition precedent to liability: The expression condition precedent to liability ( or recovery ) is used to describe a term that allows the insurers to avoid liability for a particular loss if the term is broken , but not avoid the contract as a whole. If a further loss occurs the insurer must pay , provided the insured in this case complies with the condition, claims conditions , such these requiring the insured to give prompt notice of a loss , or not admit liability , provide examples of this category of condition.

Warranties:
We begin by looking at terms that are described as warranties , these are the most important terms in an insurance contract and bring about the most drastic effects if they are broken. Nature of warranties: Until fairly recently , a warranty in an insurance contract was commonly described as a term which , if broken , allowed the insurers to repudiate the contract as a whole , in this respect it was regarded as being similar in effect to what is described as a condition in the general law of contract . The house of lords held that a breach of warranty terminated cover automatically from the date of the breach and , to all intents and purposes , terminated the insurance policy , although the house of lords did not state that this rule applies to non-marine insurance , it has been assumed that it does in subsequent cases. a warranty is essentially a promise made by the insured relating to the facts or to something which they agree to do . a warranty may relate to past or present facts ( i.e. be a promise that something was so or is so ) , or it may be a continuing warranty , in which the insured promises that a state of affairs will continue to exit or that they will continue to do something . for example a warranty may require that no work be carried out at a greater height than twelve meters , or that an intruder alarm is to be kept in good working order and regularly tested. Exact compliance: A warranty must be exactly complied with , if its broken , cover terminate , even if the breach did not cause or have any connection with a loss , and even if the breach has been remedied by the time a loss occurs , As stated above , termination arises from the date of the breach . If warranty has regard to past or present facts , cover ( and effectively the contract ) will terminate ab initio ( from the beginning ) , since by definition the breach will exist from the start of the contract.

A warranty is denned as the collateral agreement, that is annexed to the agreement transferring theproperty right in the thing sold, by which warranty, the seller vouches for, either expressly or impliedly, the title, the condition and the quality of the subject matter of the sale. An express warranty is an express or positive declaration or assertion made by the seller, relating to some fact respecting the thing sold, which statement may be taken by the buyer as true, and one on which there is an obligation on which he may hold the vendor. A representation is the statement that precedes the agreement of sale, on which the contract of sale is founded, and if the representation is relied on, it is the inducement of the contract. A false representation may, if it amounts to fraud, give the injured party the right to rescind the contract itself, or hold the other party in damages for its breach. A warranty is likewise to be distinguished from condition. If there is a condition which forms the basis of the contract, and the condition be broken, the contract is at an end. A breach of warranty does not bring the contract to an end; it merely gives a right in damages for the breach.

Warranty n. a written statement of good quality of merchandise, clear title

to real estate, or that a fact stated in a contract is true. An "express warranty" is a definite written statement and "implied warranty" is based on the circumstances surrounding the sale or the creation of the contract.

CASE STUDY:
The Jhonstone case The facts of this case were Dr Johnstone took his employing hospital to court alleging that his employment contract breached the hospital's duty to him to provide a healthy and safe workplace. The doctor was working from 40 hours Monday to Friday and then a further 48 hours on weekends. Outcome: The Court rejected the Hospital's defence. It had been argued that 'if you can't stand the heat - get out of the kitchen. The Court instead stated: It is a matter of grave concern that junior doctors should be required to work such long hours without proper rest that not only their health may be put at risk but their patients as well. This was a three judge bench with one judge Leggatt L.J. dissenting from the majority opinion. An express term allowing the employer to require the employee to work 88 hours was qualified by a term implied on health grounds. This obviously raised the question of the interrelationship between express and implied terms.

Stuart-Smith L.J. observed that the duty was implied by law, not just a Moorcock implication. The case may therefore be an overriding duty case, but another possibility is that a specific express term can be qualified by an implied general term . Express and Implied Terms The link between express and implied terms within the same contract was the major issue in the Johnstone case. When faced with two conflicting terms, one express and the other implied, Stuart-Smith L.J chose the one which appeared to him correct on "principle" presumably, whether the term which prevailed was express or implied would make no difference, regard being had to the merits of the case. It so happened that in the instant case, the term which prevailed was implied. In response to the defendant counsels argument that an express term must prevail over an implied term, Stuart-Smith L.J. responded thus: "but this is not an implication that arises because it is necessary to give business efficacy to the contract [i.e. a term implied in fact] ; it arises by implication of law." The statement just quoted would seem to suggest that a term implied in law can "trump" even an express term of contract, precisely because of its status. This would, in turn, appear to suggest that because a term implied in law is premised on broader public policy grounds, it ought to supersede even a (contrary) express term of the contract. Thus, this is contrary to the conventional principles. In addition this particular interpretation has put a premium on careful drafting . Leggatt L.J. adopted the most straightforward approach, realizing the incompatibility of the express term on the one hand and the term sought to be implied on the other , he gave primacy (according to conventional principles) to the express term, and thus delivered a dissenting judgment and unlike Stuart L.J Leggatt L.J. placed no emphasis on whether or not a term was implied in law. Quoting his words "although it is a canon of construction that the terms of a contract will be construed, as far as possible, so as to be compatible with each other, it is axiomatic that the scope of an express term cannot be cut down by an implied term; and the it is a true of term implied by law as it is of terms which depend on the intentions of the parties (i.e terms implied in fact)". It is no wonder that the Johnstone case was overruled subsequently by the Queens Bench . It was held that ".certain terms will be implied, unless the implication of such a term would be contrary to the express words of the agreement." Thus, the previous position was retained by the court. Thus, the Johnstone case is an excellent example which shows the difficulties which the court faces when it wants to do justice and thus gives

an overzealous utilization of implied terms thereby overriding the express terms itself. When there is a conflict between express and implied terms it is the former which should have an overriding effect as it was the express intentions of the parties themselves. An implied term on the other hand is a product of the courts interpretation.