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L Schuler AG v Wickman Machine Tools Sales Ltd [1974] AC 235

Condition versus warranty in a contract

Facts

Schuler were a company engaged in the manufacture of types of tools. They had contracted with Wickman, who had sole rights to sell Schuler products in the UK. The contract included a term which stated that Wickman must send a sales person to every single company of car makers on a specific list on a weekly basis. If this was to be fully achieved, this would require that Wickman make 1400 visits over the 4 and a half years contract. They did not manage to adhere to that part of the contract (which was argued by Schuler to be a condition of the contract since Clause 7b of the contract expressly stated that this was a condition). Initially Wickman did not make any visits, and Schuler waived the condition for a short duration, but later as the visits started, they became dissatisfied that not all visits were being made. On those grounds, Schuler terminated the contract arguing a breach of condition. Wickman argued that Schuler had terminated the contract wrongfully.

Issues

The issue in the case was whether the fact that a term of the contract was called a “condition” was conclusive, and whether it could be anything else upon a full reading and interpretation of the contract.

Held

The courts held that Clause 7b was a warranty and not a condition and that simply calling a term a condition did not necessarily make it so. Therefore Schuler was not entitled to terminate the contract without giving notice and allowing Wickman to remedy the situation.


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