FACULTY OF SCHOOL OF LAW

AURO UNIVERSITY, SURAT

GUJARAT

Topic Name:
Conditions and Warranties

NAME: SUCHI PATEL

COURSE: BBA-LLB (SEMESTER-3)

BATCH: 2018 - 23

SUBJECT: CONTRACT- II

FACULTY: MS. NANDA PARDHEY

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 INDEX

1. Abbreviation………………………………………………………………………………3
2. Table of cases……………………………………………………………………………...4
3. Research methodology………………………………………………………………….....5
4. Introduction………………………………………………………………………………..6
5. Evolution and development……………………………………………………………….7
6. Conditions…………………………………………………………………………………8
7. Warranties…………………………………………………………………………………8
8. Distinction between Condition and warranty……………………………………………..9
9. When condition to be treated as warranty……………………………………………… 10
10. Express and implied conditions and warranties………………………………………….11
11. Summary…………………………………………………………………………………18
12. Suggestions……………………………………………………………………………...18
13. Webliography…………………………………………………………………………….19

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 ABBREVIATION

V./ Vs Versus

Co. Corporation

Sec. Section

& And

Ors. Others

AIR All India Report

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Table of cases:
Drummond and sons vs. Van Ingen & Co. [1939]

Nichal vs. Godts (1854) 10 Ex. 191

Wallis vs. Pratt CA [1910] 2 KB (1003)

Baldry vs. Marshall [1925] 1 KB 260

Nibblet vs. Confectioners Materials Co. [1921]

Clarke vs. Army & Navy Co-operative society Ltd. Ltd [1903] 1 KB 155

STATUTES:

 Sales of goods act, 1930

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 CHAPTER:1

Research methodology:

I would be doing my research from secondary sources, including materials available on the
internet, as well as books, magazines and journals available in the library. The research is
deductive and the style of values is in accordance with the standards set by the university.

The first chapter consists of the introduction where I have given the brief meaning of conditions
and warranty and also given the evolution and development of the conditions and warranty.

In my second chapter I have gone to explain condition and warranty in detail and also the
different between the condition and warranty.

In my third chapter I have gone to explain the classification of condition which includes the
express condition and implied condition. I also explain the parts of implied condition with the
case laws and example.

In fourth chapter I have explain the classification of warranty which includes the express
warranty and implied warranty. I also explain the part of implied warranty with the case laws and
example.

My last chapter is my conclusion in which I have summed up my term paper.

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 CHAPTER:2

Introduction

At the time of selling the goods, a seller usually makes certain statements or representations with
a view to induce the intending buyer to purchase the goods. Such representations are generally
about the nature and quality of the goods and about their fitness for the goods and about their
fitness for the buyer’s purpose. These representations aim at providing satisfaction to the buyer.
Some of these representations are merely opinion which does not form a part of contract of sale,
while some of them become a part of contract of sale.

A representation which forms a part of the contract of sale and affects the contract is called a
‘stipulation’, which may be either a condition or a warranty denote the promise made by the
seller, the Sale of Good Act recognizes them separately as both differ in their nature.

Condition: If a stipulation is such that it affects the very basis of the contract, it is a condition. In
other words condition is a stipulation which goes to the root of the contract and a breach of the
same would allow the buyer to avoid the contract

Warranty: If the promise is such that it is collateral to the main purpose of the contract it is a
warranty. Therefore a warranty refers to a stipulation which is attached to the main contract and
a failure of the same does not allow a buyer to avoid the contract.

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 CHAPTER:3

Evolution and development

The history of condition and warranty has a very long history in India. We can found the same in
famous “Arthsashtra” written by the great Chanakya in almost 4th century.

By July 1 - 1930, the law of sale of goods in India was covered by chapter VII of Indian Contract
Act, 1872. Indian Contract Law itself is based on the common law of the United Kingdom and
the laws of the sale of goods in India are consistent with the principles of common law of the
United Kingdom, including commercial law. The British law of sale of goods was codified in
1893 by the enactment of sale of goods Act to meet the needs of a growing society.

This Act is in effect an additional definition or interpretation section and supplies a want long
felt in India. At the time when the contract act was passed the phrase ‘warranty’ has been and
used with several different meanings and shades of meaning and the difficulty had been
increased by some of those meanings overlapping some of the meaning of the word ‘condition’.
The contract Act used the word ‘warranty” in the ambiguous sense and did not define it. The
result was that the court had to decide on the construction of each section whether the word
warranty was used in the strict sense in which it was used, or in the wider sense of the English
‘condition’, as it was in 1182. The present act avoids this confusion and uses the words
‘condition’ and warranty and draws a clear distinction between the two.

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 CHAPTER:4

Conditions

The term ‘condition’ is defined in section 12(2) of the sale of goods act as under:

“A condition is a stipulation essential to the main purpose of the contract, the breach of which
gives rise to a right to treat the contract as repudiated.”1

A condition is an important representation made by the seller and it is the main purpose of the
contract. It is so essential that its non-performance may fairly be considered by the other party as
a substantial failure to perform the contract. If it proves to be false, the buyer has the right to
terminate the contract and to have a refund of the price.

Warranties

The term ‘warranty’ is defined in sec. 12(3) of sale of goods act as under.

“A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise
to a claim for damages but not a right to reject the goods and treat the contract as repudiate.”2

In other words, a warranty is a representation by the seller. It is not a very important factor in the sale of
goods. It is only collateral to the main purpose of the contract and if it proves to be untrue, the contract. He
can only claim damages from the seller.

1
Section 12(2) of sale of goods act, 1930
2
Section 12(3) of sale of goods act, 1930

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Distinction between Condition and warranty

Points Condition Warranty

Nature A condition is stipulation that is A warranty is a stipulation that is

essential to the main purpose of the collateral to the main purpose of
contract. the contract.

Significance It essential to the very purpose of the It cannot be considered as failure

contract that its non-performance may to perform the contract.
be considered as failure to perform the
contract.

Consequence of The aggrieved party may treat the The aggrieved party cannot
breach contract as repudiated. repudiate the contract but can
claim damages.

Treatment A breach of condition may be treated A breach of warranty cannot be

as breach of warranty. treated as breach of condition.

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When condition to be treated as warranty (section 13)3

Section 13 specifies cases where a breach of condition be treated as a breach of warranty. As a

result of which the buyer loses his right to rescind the contract and can claim for damages only.

In the following cases, a contract is not avoided even on account of a breach of a condition:

(1) Where the buyer altogether waives the performance of the condition. A party may for his
own benefit, waive a stipulation.

(2) Where the buyer elect to treat the breach of the conditions, as one of a warranty. That is
to say, he may claim only damages instead of repudiating the contract.

(3) Where the contract is non-severable and the buyer has accepted either the whole goods or
any part thereof. Acceptance means acceptance as envisaged in section 72 of the Indian
contract Act, 1872.

(4) Where the fulfillment of any condition or warranty is excused by law by reason of
impossibility or otherwise.

Example:

A agrees to supply B 10 bags of first quality sugar at Rs. 625 per bag but he supplies only
second quality sugar, the price of which is Rs. 600 per bag. There is a breach of condition

3
Section 13 of sale of goods act, 1930: When condition to be treated as warranty.—

(1) Where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may waive the
condition or elect to treat the breach of the condition as a breach of warranty and not as a ground for
treating the contract as repudiated.

(2) Where a contract of sale is not severable and the buyer has accepted the goods or part thereof, the breach of
any condition to be fulfilled by the seller can only be treated as a breach of warranty and not as a ground
for rejecting the goods and treating the contract as .repudiated, unless there is a term of the contract,
express or implied, to that effect.

(3) Nothing in this section shall affect the case of any condition or warranty fulfillment of which is excused by
law by reason of impossibility or otherwise.

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 and the buyer can reject the goods, but if the buyer so elects, he may treat it as a breach of
warranty, accept the second quality sugar and claim damages at Rs. 25 per bag.

Express and implied conditions and warranties (section 14-17)

Conditions and Warranties may be either express or implied. They are express when the terms of
the contract expressly state them. They are implied when, not being expressly provided for.

1. Express conditions:

Express conditions are those which have been expressly agreed upon by both the parties
at the time of making the contract of sale.

2. Express warranties:

Express warranties are those which have been expressly agreed upon by both the parties
at the time of formation of the contract of sale.

3. Implied conditions:

Following conditions are implied in a contract of sale of goods unless the circumstances
of the contract show a different intention.

(i) Condition as to title [section 14(a)]

In every contract of sale, unless there is an agreement to the contrary, the first
implied condition on the part of the seller is that

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 a. In case of sale, he has a right to sell the goods, and
b. In case of an agreement to sell, he will have right to sell the goods at the
time when the property is to pass
In simple word, the condition implied is that the seller has the right to sell the
goods at the time when the property is to pass. If the seller’s title turns out to be
defective, the buyer must return the goods to the true owner and recover the price
from the seller.4

Example:

A purchased a tractor from B who had no title to it. After 2 months, the true
owner spotted the tractor and demanded it from A. Held that A was bound to hand
over the tractor to its true owner and that A could sue B, the seller without title,
for the recovery of the purchase price.

(ii) Sale by description [section 15]

Where there is a contract of sale of goods by description, there is an implied

condition that the goods shall correspond with the description.5

This rule is based on the principle that “if you contract to sell peas, you cannot
compel the buyer to take beans. “The buyer is not bound to accept and pay for the
goods which are not in accordance with the description of goods.”

Example:

A at Kolkata sells to B twelve bags of ‘waste silk’ on its way from Murshidabad
to Kolkata. There is an implied condition that the silk shall be such as is known in
the market as ‘waste silk’. If it is not, B is an entitled to reject the goods.

4
Section 14(a) of Sale of Goods Act, 1930
5
Section 15 of Sale of Goods Act, 1930

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 (iii) Sale by sample [section 17]

In a contract of sale by sample, there is an implied condition that

a. The bulk shall correspond with the sample in quality;
b. Buyer shall have a reasonable opportunity of comparing the bulk with the
sample.6

Example:

A company sold certain shoes made of special sole by sample for the French
Army. The shoes were found to contain paper not discoverable by ordinary
inspection. Held, the buyer was entitled to the refund of the price plus damages.

Case law:

In Drummond and sons vs. Van Ingen7, A cloth dealer placed an order with a
manufacturer of worsted suiting on the basis of sample shown. The supplied cloth
contained a defect which made it unfit for ordinary wear. The same defect was
present in the sample also, but could not have been discovered any reasonable
inspection of it. The seller was held guilty of breach of implied condition.

(iv) Sale by sample as well as by description [section 15]

Where the goods are sold by sample as well as by description the implied
condition is that the bulk of the goods supplied shall correspond both with the
sample and the description.8

6
Section 17 of Sale of Goods Act, 1930
7
Drummond and sons vs. Van Ingen & Co. [1939]
8
Section 15 of Sale of Goods Act, 1930

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 Case law:

In Nichal vs. Godts,9 Nichal agreed with Godts to sell certain oil described as
refined sunflower oil, warranted only equal to sample. The goods tendered were
equal to sample, but contained a mixture of hemp oil. Godts can reject the goods
and was entitled to recover damages for breach of condition.

Case law:

In Wallis vs. Pratt,10 A contracted with B for the sale of “baby corn” seeds. A
showed the seed to be and stated that they were seeds of “baby corn”. On
growing them B came to know that they were “American corn” and not “baby
corn”. The defect in the seeds could not be detected unless sown and held that A
could recover damages.

(v) Condition as to quality or fitness [section 16(1)]

Ordinarily, there is no implied condition as to the quality or fitness of the goods

sold for any particular purpose.11

Example:

A bought a set of false teeth from B, a dentist. But the set was not fit for A ‘s
mouth. A rejected the set of teeth and claimed the refund of price. It was held that
A was entitled to do so as the only purpose for which he wanted the set of teeth
was not fulfilled.
Case law:

9
Nichal vs. Godts (1854) 10 Ex. 191
10
Wallis vs. Pratt CA [1910] 2 KB (1003)
11
Section 16(1) of Sale of Goods Act, 1930

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 In Baldry vs. Marshall12, Marshall asked Baldry, a car dealer, to suggest him a
suitable car for touring purpose. Baldry suggested buying a Bugatti car. Marshall
accordingly purchased the car, but found it unfit for touring purpose. Held, the
suitability of the car for purpose being the condition, it was so important that its
non-fulfillment defeated the very purpose of the buyer. Hence, Marshall could
return the car and get back the price.

(vi) Condition as to merchantability [section 16(2)]

Where goods are bought by description from a seller who deals in goods of that
description whether he is the manufacturer or producer or not), there is an implied
condition that the goods shall be of merchantable quality.13

Example:

A bought a black velvet cloth from C and found it to be damaged by white ants.
Held, the condition as to merchantability was broken.

4. Implied Warranties

The examination of section 14 and 16 of the sale of goods Act, 1930 discloses the
following implied warranties:

(i) Warranty as to quiet possession [section 14(b)]

An implied warranty that the buyer shall have and enjoy quiet possession of the
goods.14 That is to say, if the buyer having got possession of the goods is later on

12
Baldry vs. Marshall [1925] 1 KB 260
13
Section 16(2) of Sale of Goods Act, 1930
14
Section 14(b) of Sale of Goods Act, 1930

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 disturbed in his possession, he is entitled to sue the seller for the breach of the
warranty.

Case law:

In Nibblet vs. Confectioners15, A firm agreed to sell condensed milk of a certain

standard to be supplied in tins to the plaintiff. The tins supplied were found to
infringe the trademark of another company of repute. Due to this reason the goods
were detained by the customs authority. The plaintiff was allowed to sell the tins
only if they remove the label so as not to infringe the trademark of the other firm.
The plaintiff did so and had to suffer loss due to the less market value of the
product. In this case the defendant did not had the right to sell due to which the
plaintiff could not enjoy quit possession of the goods. Therefore the plaintiff was
allowed to claim damages.

(ii) Warranty as to non-existence of encumbrances [section 14(c)]

An implied warranty that the goods shall be free from any charge or encumbrance
in favor of any third party not declared or known to the buyer before or at the time
the contract is entered into.16

Example:

A pledges his car with C for a loan of Rs. 15000 and promises him to give its
possession the next day. A then sells the car immediately to B, who purchased it
on good faith, without knowing the fact B. Then B files a suit against A for
recovery of the money with interest.

15
Nibblet vs. Confectioners Materials Co. [1921]
16
Section 14(c) of Sale of Goods Act, 1930

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 (iii) Warranty as to quality or fitness by usage of trade [section 16(3)]

An implied warranty as to quality or fitness for a particular purpose may be

annexed or attached by the usage of trade.17

(iv) Disclosure of dangerous nature of goods:

Where the goods are dangerous in nature and the buyer is ignorant of the danger,
the seller must warn the buyer of the probable danger. If there is a breach of
warranty, the seller may be liable in damages.

Case law:

In Clarke vs. Army &Navy Co-operative society Ltd.18, respondent sold a tin of
disinfectant powder to plaintiff. He knew that it was likely to be dangerous to
plaintiff, if it was opened without special care being taken. Plaintiff opened the tin
whereupon the disinfectant powder flew into his eyes, causing injury. Held
respondent was liable for the damages caused to plaintiff, as he should have
warned plaintiff of the probable danger.

17
Section 16(3) of Sale of Goods Act, 1930
18
Clarke vs. Army & Navy Co-operative society Ltd. Ltd [1903] 1 KB 155

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 CHAPTER:4

Summary

A representation which forms a part of the contract of sale and affects the contract is called
a ‘stipulation’. A condition is a stipulation, essential to the main purpose of the contract,
the breach of which gives right to repudiate the contract and to claim damages. A
warranty is a stipulation collateral to the main purpose of the contract , the breach of
which gives rise to a claim for damages but not a right to reject the goods and treat
the contract as repudiate. A breach of condition may be treated as a breach of warranty. A
breach of warranty cannot be treated as a breach of condition.

CHAPTER: 5

Suggestions

 While entering into a contract of sale, certain stipulations are put by both the parties i.e.
the buyer and the seller such as time for payment of price, time for delivery, quality of
goods, transfer of title, etc.
 These stipulations with reference to goods may be ‘conditions’ or ‘warranties’ depending
upon the construction of the contract. A stipulation essential to the main purpose of the
contract is a ‘condition’ whereas collateral stipulations are called warranties.
 Breach of a ‘condition’ and that of a ‘warranty’ have different consequences. Every
contract of sales have certain conditions and warranties implied by law. Besides, the
parties may provide for ‘conditions’ and ‘warranties’ by an express agreement. Regarding
implied condition or warranty as to the quality of fitness for any particular purpose of
goods supplied, the rule is ‘let the buye beware’ i.e., the seller is under no duty to reveal
unflattering truths about the goods sold, but this rule has certain exceptions.

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Webliography:

 https://indiankanoon.org/
 https://blog.ipleaders.in/implied-conditions-and-warranties-under-the-sale-of-
goods-act/
 https://www.lawteacher.net/free-law-essays/commercial-law/conditions-and-
warranties-in-sale-of-goods-commercial-law-essay.php
 http://www.legalserviceindia.com/legal/article-241-implied-conditions-and-
warranties-under-the-sale-of-goods-act-1930-with-reference-to-the-rule-of-caveat-
emptor.html

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