Conditions are major provision terms that go to the very root of a contract breach of which means there has been substantial failure to perform a basic element in the agreement.
Megaw LJ, in 1970, preferred the use of the classic categorizing into condition or warranty due to legal certainty.
[10] In general, parties can only sue for enforcement of valid contractual terms as opposed to representations or mere puffs.
The Privy Council established a five-stage test in BP Refinery (Westernport) Pty Ltd v Shire of Hastings.
[15] However, the English Court of Appeal sounded a note of caution with regard to the BP case in Philips Electronique Grand Public SA v British Sky Broadcasting Ltd in which the Master of the Rolls described the test as "almost misleading" in its simplicity.
[21][22] In implying terms in an informal contract, the High Court has suggested that a flexible approach is required.
For example, each American state except Louisiana has adopted Article 2 of the Uniform Commercial Code, which regulates contracts for the sale of goods.
In Rooney v CSE Bournemouth Ltd., an aircraft-owner whose plane was covered by a maintenance work order issued using this terminology, argued that wording was not sufficient to incorporate the company's standard terms and conditions.
Although these cases may appear to fall into the category of agreement to agree, Australian courts will imply an obligation to negotiate in good faith provided that certain conditions are satisfied:[33] The test of whether one has acted in good faith is a subjective one; the cases suggest honesty, and possibly also reasonableness.
'Unfair' is a term in standard form (specifically that was not individually negotiated) that "causes a significant imbalance in the parties' rights and obligations arising under the contract to the detriment of the consumer".
[37] It must also be shown the term lacks 'good faith'; the claim failed in Director General of Fair Trading v First National Bank plc,[38] as striking down a relatively high interest rate (falling short of extortionary rates) would mean borrower could have safely ignored the interest rates in its loan agreements (see UK requirements for consumer financial advice/advice waivers in major consumer loan agreements) and that high-rate lenders would receive no interest.
The non-fulfillment of a contingent condition means that the parties are not required to perform their side of the respective bargain.