Hong Kong Fir Shipping Ltd v Kisen Kaisha

Material Facts:

The plaintiff, Hong Kong Fir Shipping Ltd, let a vessel to the defendants for a period of 2 years. As part of the terms of the contract, the plaintiff was required to ensure that “the ship was seaworthy, she being fitted in every way for ordinary cargo service”. The plaintiff’s engineers were also required to maintain the seaworthiness of the ship for the period of the hire. However, the inefficiency of the plaintiff’s engineers led to numerous breakdowns and delays, and the defendants consequently repudiated the contract. The claimants brought an action for wrongful repudiation.

Issues:

1. Whether or not the ship being rendered unseaworthy constituted a breach of a condition on grounds of which the defendants could repudiate the contract.

Holding:

1. The ship being rendered unseaworthy was not a breach of a condition.

Ratio Decidendi:

The court held that the seaworthiness of the ship was an innominate term and whether or not the defendant could terminate the contract depended on the consequences of the ship being rendered unseaworthy. In the present case, the breakdowns only led to a 20 weeks delay, which was not considered so substantial as to deprive the plaintiff of the whole benefit of the contract. The seaworthiness of the ship was thus considered a warranty in light of the less severe consequences.