The Hansa Nord (1976)

Lord Denning MR summarises the position beautifully when the case reached the Court of Appeal:

HELD Denning MR

“To what extent can a party in breach call upon the other side to perform their part?

At one time it was thought to depend on the nature of the stipulation rather than extent of breach or the consequences.

Whilst the Sale of Goods Act 1893 used the language of condition and warranty, it cannot have been intended to rule out the intermediate terms, the cases upon which were legion.

The Act expressly preserved the rules of the common law which were inconsistent with the Act.

The Hong Kong shipping case drew our attention to this vast body of law, and showed that if there is a breach which goes to the root of the contract, the other party may consider they are discharged, but otherwise not.

In my opinion, those cases apply to Sale of Goods.

So, 1) is the provision a condition? 2) If the answer to that is “no”, then we must look to the extent of the breach.

We should also add anticipatory breach – if one party in advance indicates that they will not perform in a vital matter, the other party may consider themselves discharged.

This clause is like one as to quality.

If a small portion of the goods were not up to scratch then commercial people would deal with it by an allowance off the price.

Buyers cannot reject goods unless the defect is serious and substantial.

On the facts, I do not think the buyer was entitled to reject the shipment. The goods cannot have been so bad if they were actually used for their intended purpose.”

OK?