Cehave NV v Bremer Handelsgesellschaft mbH [1976] QB 44
Contract; breach of contract; innominate terms; breach; remedies; termination of performance.
Facts: Bremer sold a quantity of citrus pellets to Cehave. The contract required the pellets to be shipped 'in good condition'. Bremer shipped pellets that were not in good condition, and their value was accordingly less. However, the pellets were still good enough to use for animal feed, which is how Cehave intended to use them. Cehave alleged that, by not shipping pellets that were in good condition, Bremer was in breach of contract. Relying on this breach, Cehave wanted to reject the pellets that had been delivered to him.
Issue: In these circumstances, was Cehave entitled to reject delivery of the pellets or was he obliged to accept the delivery and claim damages for the inferior quality?
Decision: Although delivering pellets that were not in good condition was a breach of contract, Cehave had no right to reject the delivery.
Reason: The term that had been breached was an innominate term (or intermediate term). Only a serious breach of such a term justifies rejecting performance, that is, a breach that substantially deprives the non-defaulting party of the benefit for which they entered the contract. Since the pellets were good enough for the buyer's purpose, Cehave was obliged to accept and pay for them; he would only have a claim for damages to the extent that they were worth less than pellets of the promised quality.