Edited by Jason Chuah
Chapter 8: Classification of contractual terms and termination clauses in English law
Like general contractual terms, terms of maritime contracts can be classified into conditions, warranties or intermediate terms. Since the decision of the Court of Appeal in The Hongkong Fir, more and more contractual terms in maritime contracts are recognised as intermediate terms. The category of intermediate terms provides flexibility of remedies for breach of contract, but it also raises uncertainty in remedies for breach of intermediate terms, in particular the right to terminate contract. Maritime parties may expressly agree a termination right when certain obligations are breached in contract. However, it would appear that parties are not free to agree damages for breach of intermediate terms. Only contractual damage identical to the damage under common law is valid, otherwise it is void because of the penalty nature of it. This restriction on freedom of contract deviates from the original intention of parties to maritime contract.
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