Warranty (in the context of contracts)

A type of contractual term which does not go to the root of the contract; i.e. its breach would not fundamentally frustrate the purpose of the contract. There are three types of contractual terms:

  • Conditions – terms that go to the core of the contract’s purpose and instrumentality, the breach of which gives rise to the right to terminate and claim damages
  • Intermediate terms – terms in between a condition and a warranty which have some ascertainable link to the core purpose of the contract, where only a ‘serious breach’ will entitle the party to terminate as well as claim damages
  • Warranties – terms that are less important to the contract’s central function, the breach of which will entitle the aggrieved party to claim damages only

In practice, terms are usually only classified as warranties if they are statutorily required. Judges have said before that a term is only classified as a warranty if there is no possible way that a breach of it would essentially deprive the aggrieved party from the main benefit of the contract (Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 27).