Free «Classification of Contractual Terms» Essay Sample

Classification of Contractual Terms


Contract term in the business field is used to mean certain concepts. A contract is an agreement between two parties that involve sufficient consideration to undertake a certain legal task. A contract term is enforced legally and provides rights as well as limitations to the parties entering the contract. The contracts define the duties and responsibilities that parties should undertake.

This paper explores the classification of contractual terms as condition, warranty or in nominates term, which seems random.


A contract is formed by an agreement made between two parties that may be individuals, organizations or groups of people with a certain intention. Parties sign contracts for the outcome they expect from a certain deal. Each of the participants who sign contracts aim at obtaining benefits from the contract. However, not all participants in a contract get benefits, in some instances. One or more participants may lose out in the contract.

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Legal systems determine how contracts work. We classify contractual terms as conditions, warranty or in nominate terms, which seem to be random.

A contractual term is a provision that forms part of a contract. Each term in a contract provides contractual commitment or breach. Breach may result to legal action. Conditions are those aspects that each of the contract partners must fulfill. If one of the participants in the contract defaults it gives the other partner the right to discharge the contract agreement (Swanson, Bindiganavale & Seetharaman, 2003).

A warranty, on the other hand, is not as crucial as compared to the condition. In this case, if a partner defaults a warranty, the contract can go on without breach. Breaches caused by conditions and warranties result in damages to the contract. For instance, when an actor decides to perform first in a musical concert, it becomes a condition. However, when a musician performs after two or three performances, it becomes a warranty.  The law can also determine a term or a nature in which a term operates in as either condition or warranty (Jennings, 2005).

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Innominate term refers to breach of contractual terms that may impact on the root of the contract or not. This depends on the nature of the violation. Breach of the contractual terms may cause damages to the contract. The legal advantage of the contract determines whether the breach of the contractual term may affect the contract negatively (Commission, 2001).

The classification of a contractual term such as condition, warranty or innominate, seems random. This is because there is no clear differentiation between the three contractual terms. The three have an influence to a contract in case of their breach. They damage the contract in equal measure. However, much condition seems to be the most critical, it results to damages in case a breach happens. Warranty is not different in any way. Damages are also attached in case of a breach (Korkh, 2004).

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However, the problem comes in because it is exceedingly difficult to ascertain when a term becomes warranty and when it becomes a condition. It seems warranty is the condition which has a less impact as compared to others. Therefore, it seems random because the margin where a difference can be established between condition and warranty cannot be brought out clearly.

Innominate term also seems random.  We cannot differentiate between condition and innominate. Innominate is defined as if it is the condition. The only difference is that, the impact that innominate causes, depend on the nature of the breach. Condition term also impacts on a contract basing on the same factors that operate in innominate term. This makes classification appear random. At one point warranty may become a condition while at another point condition may become innominate (press, 2011).

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The classification of a contractual term such as condition, warranty and innominate, is random because there is no clear difference between them. Therefore, classifying the three terms becomes challenging.