Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7 is a landmark English contract law case. Common Law Procedure Act 1852. Plaintiff [Hongkong] owned a ship and chartered it to the Defendant [Kawasaki] A clause in the agreement guaranteed that the ship would be in good condition etc. (1) The test whether the event relied upon has this consequence is the same whether the event is the result of the other party's breach of contract or not, as Mr. Justice Devlin pointed out in Universal Cargo Carriers Corporation v Citati. Hongkong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd., the Hongkong Fir (1961) by Donal Nolan :: SSRN. Hong Kong responded that Kawasaki were now the party in breach for wrongfully repudiating the contract. The plaintiffs said the repudiation was wrongful, and that the ship was fit to charter. And the Marine Insurance Act 1906 s 39(4) provides that "a ship is deemed to be seaworthy when she is reasonably fit in all respects to encounter the ordinary perils of the adventure insured.". But where they go only to a part, where a breach may be paid for in damages, there the defendant has a remedy on his covenant and shall not plead it as a condition precedent". The agreement included a term that the ship would be seaworthy throughout the period of hire. This chapter discusses the decision of the Court of Appeal in Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd, The Hong Kong Fir [1962] 2 QB 26, one of the most important English contract cases of the 20th century. Hong Kong Fir Shipping v Kawasaki Kisen Kaisha [1962] 2 QB 26 (Case summary) This approach has been criticised for sacrificing certainty. HONGKONG FIR SHIPPING COMPANY, LTD. v. KAWASAKI KISEN KAISHA, LTD. [1961] 1 Lloyd's Rep. 159 QUEEN'S BENCH DIVISION(COMMERCIAL COURT) Before Mr. Justice Salmon The document also includes supporting commentary from author Nicola Jackson. Thus, the type of breach must be determined by the judges. "Seaworthiness" is defined both by common law and by statute. Discharge by breach - This is the precise note for contract law course. Court held that breach was serious so K was allowed to rescind contract.) Nolan, Donal, Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd, the Hongkong Fir (May 30, 2008). To export a reference to this article please select a referencing stye below: Our academic writing and marking services can help you! On arrival at Osaka, a further fifteen weeks of repairs were needed before the ship was seaworthy again. Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd which was held in 1961 is a landmark case in English contract law area. This case document summarizes the facts and decision in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26, Court of Appeal. In some classes of contracts such as sale of goods, marine insurance, contracts of affreightment evidenced by bills of lading and those between parties to tills of exchange, Parliament has defined by statute some of the events not provided for expressly in individual contracts of that class; but where an event occurs the occurrence of which neither the parties nor Parliament have expressly stated will discharge one of the parties from further performance of his undertakings it is for the court to determine whether the event has this effect or not. This case is cited by: Cited – Hong Kong Fir Shipping Co v Kawasaki Kisen Kaisha Ltd CA 20-Dec-1961 The plaintiffs had recently acquired the ship the ‘Hong Kong Fir’ and contracted to charter it to the defendants, but being late in delivering it, the defendants cancelled the charterparty contract. The fact that the emphasis in the earlier cases was upon the breach by one party to the contract of his contractual undertakings, for this was the commonest circumstance in which the question arose, tended to obscure the fact that it was really the event resulting from the breach which relieved the other party of further performance of his obligations; but the principle was applied early in the nineteenth century and without analysis to cases where the event relied upon was one brought about by a party to a contract before the time for performance of his undertakings arose but which would make it impossible to perform those obligations when the time to do so did arrive: for example, Short v Stone;[11] Ford v Tiley;[12] Bowdell v Parsons. An intermediate term is a term of a contract that may give rise to a right of termination for breach depending on how serious the consequences are. The Defendant, after having problems with the bad state of the ship, notified the Plaintiff that the condition of the ship being in … Any opinions, findings, conclusions, or recommendations expressed in this material are those of the authors and do not reflect the views of LawTeacher.net. Cases - Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd Record details Name Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd Date [1962] Citation 2 QB 26 CA Legislation. In my view, in his judgment - on which I would not seek to improve - the learned judge took into account and gave due weight to all the relevant considerations and arrived at the right answer for the right reasons. In the earlier cases before the Common Law Procedure Act 1852, the problem tends to be obscured to modern readers by the rules of pleading peculiar to the relevant forms of action-covenant, debt and assumpsit, and the nomenclature adopted in the judgments, which were mainly on demurrer, reflects this. HONGKONG FIR SHIPPING COMPANY, LTD. v. KAWASAKI KISEN KAISHA, LTD. (THE "HONGKONG FIR") [1961] 2 Lloyd's Rep. 478 COURT OF APPEAL Before Lord Justice Sellers, Lord … However, due to the fact that the engine room staff was inefficient and the engines were very old, the ship was held up for 5 weeks, and then needed 15 more weeks worth of repairs after the deal had been made. In doing so, the Court adopted a policy that favours contractual performance over greater simplicity and certainty. case of Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd. University. At first instance, it was held that although the ship was a seaworthy vessel on delivery in Liverpool, Hong Kong Fir had not exercised due diligence to maintain the vessel in an efficient and seaworthy state. *You can also browse our support articles here >. Reference this The problems developed with the engine of the ship and the engine crew were incompetent. There are, however, many contractual undertakings of a. more complex character which cannot be categorised as being "conditions" or "warranties" if the late nineteenth century meaning adopted in the Sale of Goods Act, 1893, and used by Lord Justice Bowen in Bensen v Taylor Sons & Co[15] be given to those terms. This test is applicable whether or not the event occurs as a result of the default of one of the parties to the contract, but the consequences of the event are different in the two cases. The key issue is turn upon whether MicroHard Company Pte Ltd has breached any term in the Software Support Services Agreement it had signed with Ravi (the Customer). The existence of innominate terms was acknowledged in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7 (20 December 1961). Under the English sale of goods principles, a condition is a term whose breach entitles the injured party to repudiate the contract,[1] but a breach of warranty shall give rise only to damages. "The distinction", he said. Hong Kong Fir Shipping Co v Kawasaki Kisen Kaisha , [1962] 2 QB 26, 1 All ER 474, known as the Hong Kong Fir case, is a leading English case on contract law. Of such undertakings all that can be predicated is that some breaches will and others will not give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract; and the legal consequences of a breach of such an undertaking, unless provided for expressly in the contract, depend upon the nature of the • event to which the breach gives rise and do not follow automatically from a prior classification of the undertaking as a "condition" or a "warranty". It is like so many other contractual terms an undertaking one breach of which may give rise to an event which relieves the charterer of further performance of his undertakings if he so elects and another breach of which may not give rise to such an event but entitle him only to monetary compensation in the form of damages. Nolan, Donal, Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd, the Hongkong Fir (May 30, 2008). Kawasaki repudiated the contract, and Hong Kong Fir sued for wrongful repudiation. On the voyage from Liverpool to Osaka, the engines suffered several breakdowns, and was off-hire for a total of five weeks, undergoing repairs. Upon initial delivery, the vessel’s machinery was described to be in ‘reasonably good condition,’ yet required constant maintenance due to its age. Background facts. However, the trial judge found that this breach was not substantial enough to entitle the charterer to repudiate the contract. On the facts, the Court held that the seaworthiness and maintenance clause was not viewed as so fundamental so as to amount to a condition of the contract, but rather constitutes a term allowing damages. Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7 is a landmark English contract law case. In this analysis of the In Jackson v Union Marine Insurance there was no breach of the express warranty; but if there had been, to engraft the implied condition upon the express warranty would have been merely a more complicated way of saying that a breach of a shipowner's undertaking to sail with all possible dispatch may, but will not necessarily, give rise to an event which will deprive the charterer of substantially the whole benefit which it was intended that he should obtain from the charter. VAT Registration No: 842417633. Diplock LJ's judgment went as follows: Every synallagmatic contract contains in it the seeds of the problems In what event will a party be relieved of his undertaking to do that which he has agreed to do but has not yet done? "which hold that, where the shipowner has not merely broken his contract, but has so broken it that the condition precedent is not performed, the charterer is discharged. Looking for a flexible role? It is, with all deference to Mr. Ashton Roskill's skilful argument, by no means surprising that among the many hundreds of previous cases about the shipowner's undertaking to deliver a seaworthy ship there is none where it was found profitable to discuss in the judgments the question whether that undertaking is a "condition" or a "warranty"; for the true answer, as I have already indicated, is that it is neither, but one of that large class of contractual undertakings one breach of which may have the same effect as that ascribed to a breach of "condition" under the Sale of Goods Act and a different breach of which may have only the same effect as that ascribed to a breach of "warranty" under that Act. Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7 is a landmark English contract law case. Any information contained in this case summary does not constitute legal advice and should be treated as educational content only. Kirby J agreed with the decision but argued strongly for the preservation of the traditional dualistic approach. The document also includes supporting commentary from author Nicola Jackson. The cases referred to by Lord Justice Sellers illustrate this and I would only add that in the dictum which he cites from Kish v. Taylor (1912 Appeal Cases page 604, at page 617) it seems to me from the sentence which immediately follows it as from the actual decision in the case and the whole tenor of Lord Atkinson's speech itself that the word "will" was intended to be "may". Hong Kong Fir Shipping Ltd v Kisen Kaisha Ltd (1962) EWCA Civ 7. Also the innocent party may well be liable for wrongful repudiation if they treat the contract as at an end where it is found that the breach did not deprive them of substantially the whole benefit of the contract. It embraces obligations with respect to every part of the hull and machinery, stores and equipment and the crew itself. And such a stipulation, unless the parties have agreed that breach of it shall not entitle the non-defaulting party to treat the contract as repudiated, is a "condition". Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. What mattered was not whether a particular contract term was called a "warranty" or a "condition", but how serious was the breach of the term. The plaintiffs had recently acquired the ship the ‘Hong Kong Fir’ and contracted to charter it to the defendants, but being late in delivering it, the defendants cancelled the charterparty contract. Case: Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7 Key terms: Square pegs and round holes Walker Morris LLP | The Commercial Litigation Journal … The starting point for any consideration of the contractual status of any particular term of a contract has to be the judgment of Diplock LJ in Hongkong Fir Shipping v Kawasaki Kishen Kaisha [1962] 2 QB 26. Kawasaki appealed. The questions arose as to (1) whether the seaworthiness obligation constituted a ‘condition’ of contract, the breach of which entitles the party to repudiate; and (2) whether the breach caused delays of a sufficient degree so as to entitle the charterer to treat the contract as repudiated. Copyright © 2003 - 2020 - LawTeacher is a trading name of All Answers Ltd, a company registered in England and Wales. It introduced the concept of innominate terms, a category between "warranties" and "conditions". [2] Hong Kong Fir Shipping Co Ltd. v Kawasaki Kisen Kaisha [1962] EWCA Civ 7 [3] Great Peace Shipping v Tsavliris Salvage [2002] EWCA Civ 1407 [4] Detailed on p.2 Soon after, in The Mihalis Angelos [1971] 1 QB 164, it was held the impossibility of the shipowner to meet the "expected ready to load" date, ipso facto entitled the charterer to repudiate for anticipatory breach of condition. This too was a judgment on demurrer but the principle was the same when the substance of the matter was in issue. This chapter discusses the decision of the Court of Appeal in Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd, The Hong Kong Fir [1962] 2 QB 26, one of the most important English contract cases … So in The Hong Kong Fir, Lord Diplock held that a ship crew being too incompetent to properly operate the vessel did not breach the contract's "seaworthiness" term in a serious enough way as to allow for termination, because the charterers still got a working boat and could have replaced the … Not arriving with due diligence or at a day named is the subject of a cross-action only. Lawyers tend to speak of this classification as if it were comprehensive, partly for the historical reasons which I have already mentioned and partly "because Parliament itself adopted it in the Sale of Goods Act, 1893, as respects a number of implied terms in contracts for the sale of goods and has in that Act used the expressions "condition" and "warranty" in that meaning. Hong Kong Fir agreed to rent their ship to Kawasaki for 24 months and stated on the date of delivery that the ship was fitted or use in ordinary cargo service. Essential Cases: Contract Law provides a bridge between course textbooks and key case judgments. Accordingly, it is impossible to determine ahead of time what type of term it is. However, modern commercial custom has since established that some breaches, such as failure to meet a "notice of readiness to load" a sea cargo, will always be repudiatory.[3]. Secondly, the Court held that an innocent party cannot treat the contract as repudiated due to delays, however significant, if the breach falls short of a frustration of the contract rendering performance impossible. Common Law Procedure Act 1852. By this time, barely seventeen months of the two-year time-charter remained. Where the event occurs as a result of the default of one party the party in default cannot rely upon it as relieving himself of the performance of any further undertakings on his part and the innocent party, although entitled to, need not treat the event as relieving him of the performance of his own undertakings. The vessel was delivered to … In this analysis of the The problem was the delay element; one had to "wait and see" the effect of the breach. Hongkong Fir Shipping Company Ltd v Kawasaki Kisen Kaisha Ltd “the Hong Kong Fir” [1961] 1 Lloyd’s Rep 159; [1961] 2 Lloyd’s Rep 478 By michael Posted on August 3, 2011 Maritime Baltime charterparty – vessel unseaworthy – charterers not entitled to cancel CASE: Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (1962) 2 QB 26 p 341 (Shipping, delayed, intermediate terms, terms were breached. The Hong Kong Fir decision was met with some alarm in the shipping world, where certainty is crucial. Court held that breach was serious so K was allowed to rescind contract.) The enormous costs involved in chartering mean that parties cannot afford to leisurely loiter, whilst pondering the consequences of the breach. The Hong Kong Fir confirmed that the term "seaworthiness" has a very broad meaning ranging from trivial defects like a missing life preserver or a major flaw that would sink the ship. [13] It was not, however, until Jackson v. Union Marine Insurance (1874) 10 Common Pleas page 125, that it was recognised that it was the happening of the event and not the fact that the event was the result of a breach by one party of his contractual obligations that relieved the other party from further performance of his obligations. This case document summarizes the facts and decision in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26, Court of Appeal. In short, the test for whether or not one may repudiate has now become, "does the breach deny the claimant the main benefit of the contract?" And so it should though he has such an excuse that no action lies". A glance at the decision in Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Ltd (1961) In McFadden v Blue Star Lines [1905] 1 KB 607 it was stated that, to be seaworthy, a vessel must have the degree of fitness that an ordinarily careful and prudent shipowner would require his vessel to have at the commencement of a voyage, having regard to all possible circumstances. Hong Kong Fir Shipping hired out their elderly ship,[4] the "Hong Kong Fir", under a two-year time charter-party to Kawasaki Kisen Kaisha. Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (1962) Kawasaki chartered the Hong Kong Fir from Hong Kong Fir Shipping Co for 24 months. In the earliest cases such as Pordage v Cole[8] and Thorpe v Thorpe[9] the question whether an undertaking was a condition precedent appears to have turned upon the verbal niceties of the particular phrases used in the written contract and it was not until 1773 that Lord Mansfield, in the case, which is a legal landmark, Boone v Eyre,[10] swept away these arid technicalities. The common law evolves not merely by breeding new principles but also, when they are fully grown, by burying their ancestors. We also have a number of sample law papers, each written to a specific grade, to illustrate the work delivered by our academic services. Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26; [1962] 1 All ER 474, considered Hunter Resources Ltd v Melville (1988) 164 CLR 234; [1988] HCA 5, considered Interlego AG v Croner Trading Pty Ltd (1992) 39 FCR 348; [1992] FCA 624, cited Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404, considered Registered Data Controller No: Z1821391. On the facts, the delays, albeit serious and repeated, did not amount to a frustration of contract that entitled repudiation of the contract, but merely a breach allowing for damages. Ship owners let the vessel, Hongkong fir, to charterers for a period of 24 months. It was an "innominate term". Take a look at some weird laws from around the world! There was a charter-party between the plaintiff who was the owner of the vessel called Hongkong Fir and the defendant who was the charterer. Free resources to assist you with your legal studies! For instance, to take Baron Bramwell's example in Jackson v. Union Marine Insurance itself (at page 142), breach of an undertaking by a shipowner to sail with all possible dispatch to a named port does not necessarily relieve the charterer of further performance of his obligation under the charter-party, but if the breach is so prolonged that the contemplated voyage is frustrated it does have this effect. Other phrases expressing the same idea were used by other judges in the cases which have already been cited by Lord Justice Sellers, and I would only add to his comments upon them that when it is borne in mind that until the latter half of the nineteenth century the only event that could be relied upon to excuse performance by one party of his undertakings was a default by the other party no importance can be attached to the fact that in occasional cases, and there may be others besides Freeman v. Taylor (1831) 8 Bingham page 124 , the Court has referred to the object or purpose of the party not in default rather than to the object or purpose of the contract, for the relevant object or purpose of the party not in default is that upon which there has been a consensus ad idem of both parties as expressed in the words which they have used in their contract construed in the light of the surrounding circumstances. The question which the learned judge had to ask himself was, as he rightly decided, whether or not at the date when the charterers purported to rescind the contract, namely 6th June, 1957, or when the shipowners purported to accept such rescission, namely 8th August, 1957, the delay which had already occurred as a result of the incompetence of the engine room staff, and the delay which was likely to occur in repairing the engines of the vessel and the conduct of the shipowners "by that date in taking steps to remedy these two matters, were, when taken together, such as to deprive the charterers of substantially the whole benefit which it was the intention of the parties they should obtain from further use of the vessel under the charter-party. 2019 case summary does not constitute legal advice and should be treated as educational content only trading name All! And by statute delays for the preservation of the ship was fit to charter held. 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