• In the case of Hong Kong fir Shipping co ltd v Kawasaki Kisen Kaisha Ltd 1962 2 QB 26, the existence of an innominate term came into existence.

Facts of the Case

  • Charterers hired a ship “she being in every way fitted for ordinary cargo service”. The owners were to “maintain her in a thoroughly efficient state in hull and machinery during service.”
  • The ship was delivered to the charterers in February 1957 in reasonably good condition, but chiefly owing to an inadequate engine room staff, there were serious breakdowns on the first voyage, resulting in lengthy delays and sizeable expenses for repairs.
  • In June 1957, the charterers who had no reasonable grounds for thinking that the vessel could be made seaworthy before September 1957, repudiated the contract.
  • The ship was inf act made thoroughly seaworthy by the middle of September.
  • The owners sued the charterers for wrongful repudiation of the charterparty.
  • Salmon,J. held that the owners were entitled to damages to which the charterers appealed.

Issues in Hong Kong fir Shipping co ltd v Kawasaki Kisen Kaisha Ltd 1962 2 QB 26

  • Did Kawasaki wrongfully repudiate the contract?

Held by Court of Appeal

  • Kawasaki liable for a repudiatory breach of contract
  • Appeal dismissed

Diplock LJ

  • Clause 1 of the contract was an innominate term that was not breached sufficiently so to enable the defendants to terminate the charterparty.
  • Although the owners were in breach of the obligation to deliver a seaworthy ship, seaworthiness was not a condition of the charterparty the breach of which entitled the charterers at once to repudiate since the delays caused by the breakdown and repairs were not sufficient for the contract to be frustrated.

“The question which the 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, June 6, 1957, or when the shipowners purported to accept such rescission, namely, August 8, 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 charterparty. In my view, in his judgment—on which I would not seek to improve—the judge took into account and gave due weight to all the relevant considerations and arrived at the right answer for the right reasons.” Pg. 72

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