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to provide the goods. It would make it, at the time, at least difficult, and sometimes impossible, for the supplier to know whether he could do so. It would fatally remove from a vital provision in the contract that certainty which is the most indispensable quality of mercantile contracts, and lead to a large increase in arbitrations. It would confine the seller—perhaps after arbitration and reference through the courts—to a remedy in damages which might be extremely difficult to quantify. These are all serious objections in practice. But I am clear that the submission is unacceptable in law. The judgment of
Diplock LJ does not give any support and ought not to give any encouragement to any such proposition; for beyond doubt it recognises that it is open to the parties to agree that, as regards a particular obligation, any breach shall entitle the party not in default to treat the contract as repudiated. Indeed, if he were not doing so he would, in a passage which does not profess to be more than clarificatory, be discrediting a long and uniform series of cases—at least from
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mercantile contracts. To such cases the "gravity" of the breach " approach of Hong Kong Fir would be unsuitable. I need only add on this point that the word " expressly " used by
Diplock LJ at p.70 of his judgment in Hong Kong Fir should not be read as requiring the actual use of the word " condition ": any term or terms of the contract, which, fairly read, have the effect indicated, are sufficient. Lord Diplock himself has given recognition to this in this House (
253:), appears to me to be correct, in particular in asserting (1) that the court will require precise compliance with stipulations as to time wherever the circumstances of the case indicate that this would fulfil the intention of the parties, and (2) that broadly speaking time will be considered of the essence in " mercantile" contracts—with footnote reference to authorities which I have mentioned.
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nominated by Tradax and on a ship nominated by Bunge. One of the shipments was to be during June 1975. Clause 7 said Bunge was to ‘give at least 15 days consecutive notice’ of the readiness of the ship for loading (i.e. which at the time mean 13 June). Bunge gave notice on 17 June. Tradax argued this
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1 W.L.R. 989, 998). But I do not doubt that, in suitable cases, the courts should not be reluctant, if the intentions of the parties as shown by the contract so indicate, to hold that an obligation has the force of a condition, and that indeed they should usually do so in the case of time clauses in
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to support it. One may observe in the first place that the introduction of a test of this kind would be commercially most undesirable. It would expose the parties, after a breach of one, two, three, seven and other numbers of days to an argument whether this delay would have left time for the seller
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The House of Lords held that proper construction of the contract meant clause 7 was a condition, so Tradax had been entitled to terminate. The contract had to be construed to give effect to the parties' intentions, and although because it allows the right to terminate one would not quickly hold that
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sued Tradax SA for wrongful termination of its agreement to supply Bunge with 5,000 tons of soya bean meal on the basis that giving notice four days late for loading the ship was not sufficiently serious a breach to warrant termination. The soya bean meal was going on three shipments from a port in
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The test suggested by the appellants was a different one. One must consider, they said, the breach actually committed and then decide whether that default would deprive the party not in default of substantially the whole benefit of the contract. They invoked even certain passages in the judgment of
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A.C. 827, 849). I therefore reject that part of the appellant's argument which was based upon it, and I must disagree with the judgment of the learned trial judge in so far as he accepted it. I respectfully endorse, on the other hand, the full and learned treatment of this issue in the judgment of
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1 Q.B. 44, that the courts should not be too ready to interpret contractual clauses as conditions. And I have myself commended, and continue to commend, the greater flexibility in the law of contracts to which Hong Kong Fir points the way
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was a breach and purported to terminate and recover damages for the difference between the contract price and the market price (which had just fallen).
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Bunge
Corporation, New York (Original Appellants and Cross- Respondents) v. Tradax Export S.A., Panama (Original Respondents and Cross-Appellants)
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in mercantile contracts agreements contained conditions, this one did.
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in the Court of Appeal... In conclusion, the statement of the law in
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case concerning the right to terminate performance of a contract.
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Bunge
Corporation (New York) v Tradax Export SA (Panama)
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Lord
Wilberforce, Lord Scarman, Lord Lowry, Lord Roskill
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127:Lord Lowry
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