Duhaime's Law Dictionary


Innominate Terms Definition:

An implied term of a contract which is neither classed as a condition or a warranty but somewhere in between; an intermediary or innominate term.

Related Terms: Warranty, Condition Precedent

In Ainsworth Lumber, Justice Newbury wrote:

"It is basic contract law that in determining whether a particular contractual term is a condition (i.e., a term so important in the context of the contract as a whole that failure by the party bound to perform to do so entitles the other party to treat the contract as at an end) or a warranty (a less important term the breach of which entitles the other party to sue for damages to compensate for its loss resulting from the breach) or an innominate term (one not identified by the parties as a condition or warranty but which, depending on the consequences of the breach, may operate as a condition), the court must look to the intentions of the parties as manifested by the entire agreement and surrounding circumstances."

Innominate terms were first introduced to the common law by Justice Diplock in Hong Kong Fir Shipping where he mentioned the term apparently in a no-man's land between the proper legal definition of a condition and that of a warranty:

"No doubt there are many simple contractual undertakings, sometimes express, but more often because of their very simplicity ... to be implied...

"[E]very breach of such an undertaking must 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 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.

"So, too, there may be other simple contractual undertakings of which it can be predicated that no breach can 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 such a stipulation, unless the parties have agreed that breach of it shall entitle the non-defaulting party to treat the contract as repudiated, is a warranty.

"There are, however, many contractual undertakings of a more complex character which cannot be categorized as being conditions or warranties. Of such undertakings, all that can be predicated is that some breaches will, and others will not, give rise to an event which would 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 the breach of such an undertaking, unless provided for expressly in that contract, depend on 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."

Some jurists hold that an innominate term is either a condition or a warranty while other suggest that an innominate term is one which is neither a condition or a warranty but a creature somewhere in between:

"Everything depends first of all upon whether the parties have identified a stipulation as a condition, warranty or innominate term. If the contract does not expressly or by implication make it clear that a term is a condition or a warranty, the term in question is an innominate term....

"A term only becomes an innominate or intermediate term if it has failed to be shown to be a condition or a warranty."1

Justice Scarman wrote in Bunge:

"The first question is always, therefore, whether, on the true construction of a stipulation and the contract of which it is part, it is a condition, an innominate term, or only a warranty. If the stipulation is one which on the true construction of the contract the parties have not made a condition, and breach of which may be attended by trivial, minor or very grave consequences, it is innominate, and the court (or an arbitrator) will, in the event of dispute, have the task of deciding whether the breach that has arisen is such as the parties would have said, had they been asked at the time they made their contract, it goes without saying that, if that happens, the contract is at an end."

In LMK Marketing:

"The resolution of this issue also involves an analysis of whether the breach complained of involves a warranty or condition. A breach of warranty gives rise to an action for damages. In contrast, a breach of a condition can entitle a party to repudiation. Where the contract does not expressly or by implication make it clear that a term is a warranty or condition, that term is considered an innominate term. Such a term can operate as either, depending on the gravity of the breach of that term."

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