A contractual term is “Any provision forming part of a contract”. Each term gives rise to a contractual obligation, breach of which can give rise to litigation. Not all terms are stated expressly and some terms carry less legal gravity as they are peripheral to the objectives of the contract.
Condition or Warranty
Conditions are terms that go to the very root of a contract. Breach of a condition will entitle the innocent party to terminate the contract. A warranty is less imperative than a condition, so the contract will survive a breach. Breach of either a condition or a warranty will give rise to damages.
It is an objective matter of fact whether a term goes to the root of a contract. By way of illustration, an actress’s obligation to perform the opening night of a theatrical production is a condition, whereas a singer’s obligation to perform during the first three days of rehearsal is a warranty.
Only certain statements create contractual obligations. Statements can be split into the following types:
- Puff (sales talk): If no reasonable person hearing this statement would take it seriously, it is a puff, and no action in contract is available if the statement proves to be wrong. It may also be referred to as “puffery”. This is common in television commercials.
- Representation: A representation is a statement of fact which does not amount to a term of the contract but it is one that the maker of the statement does not guarantee the truth of. This gives rise to no contractual obligation but may amount to a tort, for example misrepresentation.
- Term: A term is similar to a representation, but the truth of the statement is guaranteed by the person who made the statement therefore giving rise to a contractual obligation. For the purposes of Breach of Contract, a term may further be categorized as a condition, warranty or innominate term.