Question

Why Intermediate term is important as part of Australian contract law? What is the diffrence between Intermediate term and other two types(Condition and Warranty)? Please list the key Australian and UK law case of this.

Answer 1

Australian contract law mainly deals with legal enforcement of made promises done freely and hence forming a legal relationship defined as a contract.

There are three terms associated with contracts and according to the impact on the remedies, the court decides the type of term of each contract.

Each of these three terms differ from each other in various respect.

Intermediate terms are important as a part of Australian contract law because there are situations when it becomes difficult to judge whether the breach of contact is falling in condition terms or warranty terms. That is the breach is in between of the two that is intermediate.

Now this term let the court decide that if the breach is considered to be serious, then it gets converted to condition and the contract can be terminated. Otherwise, if the breach is thought not of that serious kind, it is treated as a warranty and cannot be terminated.

Hence this intermediate term is important to decide the actions taken on the breach of contract being done by any party.

Let us discuss the difference between condition term, intermediate term and warranty terms.

Basis	Condition	Intermediate	Warranty
Type of term	Fundamental term	Hybrid term	Cosmetic term
Remedy	Rescission and damage	Determined by court either Rescission or damage	Damage
Importance	Has more importance	Decided on the basis of seriousness of the breach of contract	Comparatively has less importance
Treatment	Can be treated as warranty	Treatment of either type is dependent on the extent of seriousness if breach.	Cannot be treated as condition

Example - Two parties entered into a contract where Mr. Tulip
is selling a laptop claiming that it is just 3 months bought and is giving the battery backup for about 12 hours for $240. Mr. Raghubir thought to buy this laptop and the contract was finalised between them. Later on after buying the laptop, Raghubir notices that the laptop has a very bad battery backup that is 4 hours. So, he wants to go to court. Now here the court will judge this as a condition term because the condition being presented in the contract has been breached by the seller as the laptop does not give 12 hours battery back up. Now in this case, the contract can be terminated by the innocent party.

Only if this particular information about the battery backup would not have been clarified by the seller, court would have treated it as a warranty and the buyer could have claimed the seller to pay for all the expenses or maintaing the damage and all that is being cost in fixing the issue. But they could not have terminated the contract.

And similarly, if it was hard to judge if it is a condition or warranty, then court would have to decide that the breach made was serious or not. And accordingly the decision has to be made.

This was an example of law case related to above.