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Conditions N Warranties Project
Conditions N Warranties Project
college of
management
Topic:
Conditions and warranties
F.Y.BMS ‘A’
INDEX
THE SALES OF GOODS ACT
DEFINITIONS
EXPRESSED CONDITIONS AND THEIR
TYPES
IMPLIED CONDITIONS AND
IMPLICATIONS OF TERMS
INFERENCE FROM AGREEMENT
WHEN THE TERMS ARE IMPLIED AND
WHEN THEY ARE NOT
EXAMPLES
CONCLUSIONS
CASE STUDIES
What is a warranty?
Sec 12(3) defines the warranty as “a warranty is a stipulation,
collateral to the main purpose of the contract, the breach of which
gives rise to a claim for the damage, but not to a right to reject the
goods and treat the contract as repudiated”
In a contract of sale, there may be stipulations which are not
essential to the main purpose of the contract; they may be rather
subsidiary or collateral to the main purpose of the contract. The
Non performance of such obligations is not regarded as a breach of
the contract as a whole, but the non performance gives rise only to a
right to claim damages. Such stipulations are known as
‘warranties.’
Express Conditions
Conditions that are agreed to by the parties, are commonly
referred to as express conditions. Express conditions are usually
denoted by language such as "if", "on condition that", "provided
that", "I the even that", and "subject to" to make an event a
condition. But usually in a dispute it is the court which decides
whether an agreement makes an even a condition by the
process of interpretation.
The first three of these tests involve well established principles, but the
fourth yet remains to be clearly established.
Classification
Conditions can be classified into two broad categories:
1. Express conditions
2. Implied conditions
Implied Conditions
If an agreement does not make an event a condition then the
court may supply a term that does so. Such conditions will be
referred to as "implied" conditions, since a court uses the
process of implication to determine whether to supply a term
that makes an event a condition and what term to supply. The
distinction between express and implied conditions is of
practical importance because the rule of strict compliance is
limited to express conditions.
Implication of terms
In certain instances, the parties to a contract may have been content to
express only the most important terms of their agreement, leaving the
remaining details to be understood. The court will then be asked to imply
a term or terms to remedy the deficiency. More often, however, a
subsequent disagreement reveals that there are contingencies for which
the parties have not provided in their express contract. The question is
then whether the court can imply a term to cover the contingency which
has unexpectedly emerged.
Thus, the basic difference between terms implied in fact and terms
implied in law is that the first is a narrower test based on either the
'business efficacy' criterion or 'officious bystander' criterion for 'terms
implied in fact' in order to give effect to the presumed intention of the
parties and secondly a broader test based on 'reasonableness' (having
regard to public policy considerations) for terms 'implied in law'. Where
terms cannot be implied on the first and narrower basis, the latter
category offers a wider scope for such a implication.
Outcome: The Court rejected the Hospital's defense. It had been argued
that 'if you can't stand the heat - get out of the kitchen. The Court instead
stated: It is a matter of grave concern that junior doctors should be
required to work such long hours without proper rest that not only their
health may be put at risk but their patients as well.
This was a three judge bench with one judge Leggett L.J. dissenting from
the majority opinion.
Stuart-Smith L.J. observed that the duty was implied by law, not just a
Moorcock implication. The case may therefore be an overriding duty case,
but another possibility is that a specific express term can be qualified by
an implied general term.
Conclusion
The doctrine of express and implied terms have evolved a lot through the
ages and have now attained a much more broader and wider
encompassing position. The concept of express and implied terms shows
how the conventional outlook towards contracts have changed, how the
main emphasis was on freedom of contract but slowly there was a decline
in this concept and the concept of implied terms started having a
stronger hold in the interpreting process. Earlier the main function of the
implied term was to provide for a fair result in exceptional circumstance
where the express terms of the contract could not and how the courts
have started taking a more active role in ensuring justice to the parties
by preventing one party to take advantage of another either due to
omissions, errors or superior drafting skills. The doctrine of implied terms
is one of the most flexible. However, the concept of implied terms can
lead to ambiguity especially when there has been an overzealous
utilization of implied terms as has happened in the John stone case.
Cases such as these show the element of uncertainty which may arise
while practical application of implied terms is being done. Thus, the
concept of implied terms though greatly beneficial in nature should be
developed carefully in a simple and methodical manner so as to prevent
unnecessary confusion and constraint.
Case study
AIR 1960 MADRAS 520 (V 47 C 175)
SORABJI H JOSHI & CO. v V. M.ISMAIL
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