An intermediate term is one of three types of contractual term recognised by Australian courts. It gets its name from falling somewhere between a warranty and a condition – the other types of terms.
Warranties are non-essential terms that do not go to the core of the contractual objectives. When a warranty is breached, the aggrieved party cannot terminate.
Conditions are essential terms, without which the parties would not have entered into the contract. When a condition is breached, the aggrieved party can terminate.
Falling between these two extremes, an intermediate term is therefore neither essential nor non-essential. When an intermediate term is breached, it will only entitle a party to terminate if that breach is deemed ‘serious’ enough to ‘substantially deprive them of the whole benefit they were intending to obtain by performance’.
The existence of intermediate terms was conclusively affirmed in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007).