10/10/2020

CONDITIONS AND WARRANTIES

Condition (Sec. 12(2))
• A condition is a stipulation which is essential to the main purpose
of the contract.
• It goes to the root of the contract.
• Its non‐fulfilment upsets the very basis of the contract.

Example :
A consults B, a motorcar dealer for buying a car suitable for
touring purposes.
B suggested that an Maruti Alto car would be appropriate.
A purchased
h d theth same car based
b d on the th recommendation.
d ti
The car turned out to be unfit for the purpose bought for.

• If there is a breach of a condition, the aggrieved party can treat

the contract as repudiated.

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Warranty (Sec. 12(3))
• It is a stipulation which is collateral to the main purpose of a
contract.

• It is not of such vital importance as a condition.

Example :
A goes to a car dealer and asks for a good car.
While selling the car, the dealer claims the mileage of the car is 16
kmpl.
Subsequently, the buyer discovers that the car actually gives only
12 kmpl.
kmpl

• If there is a breach of warranty, the aggrieved party can only claim

damages.
• He cannot repudiate the contract.

Difference between condition and warranty
Difference as to Condition Warranty
Value Stipulation essential to the main Stipulation which is collateral
purpose of the contract. to the main purpose of the
contract.
Breach The aggrievd party can repudiate the The aggrieved party can only
contract. claim
l i damages.
d
Treatment Breach of a condition can be treated Breach of a warranty,
as a breach of warranty, if the however, cannot be treated
aggrieved party is content only with as a breach of condition.
damages.

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When condition can be treated as a warranty (Sec. 13)
1. Voluntary waiver of condition (Sec. 13(1))

The buyer may :

‐ waive the condition.
‐ elect to treat the breach of condition as breach of warranty.

If the buyer once decides to waive the condition, he cannot

afterwards insist on its fulfilment.

2. Acceptance of goods by the buyer (Sec. 13(2))

Where a contract of sale is not severable and the buyer has

accepted the goods or part thereof, then breach of a condition
can only be treated as a breach of warranty unless there is a term
in the contract, express or implied, to the contrary.

Implied conditions and warranties 
• Implied conditions and warranties (contained in Secs. 14 to 17)
are those which the law implies into the contract unless the
parties stipulate to the contrary.

• An express warranty or condition does not negative an implied

warranty or condition unless the express warranty or condition is
inconsistent with the implied warranty or condition (Sec. 16(4)).

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Implied conditions 
1. Condition as to title (Sec. 14(a))

In a contract of sale, unless the circumstances of the contract are

such as to show a different intention, there is an implied
condition on the part of the seller that :
a. In the case of a sale, he has the right to sell the goods.
b. In the case of an agreement to sell, he will have a right to sell
the goods at the time when the property is to pass.

What happens when a seller has no title at the time of sale but
subsequently acquires a title?

Implied conditions 
2. Sale by description (Sec. 15)

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

implied condition that the goods shall correspond with the description.

If the description of the article tendered is different in any respect, it is

not the article bargained for and the other party is not bound to take it.

“Sale of goods by description” may include the following situations :

1. where the buyer has not seen the goods and relies on the
d
description
i i given
i b the
by h seller.
ll
2. where the buyer has seen the goods but he relies not on what he
has seen but what was stated to him and the deviation of the goods
from the description is not apparent.
3. packing of goods may sometimes be a part of description.

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Implied conditions 
• Sale by description as well as by sample (Sec. 15)

If the sale is by sample as well as by description, it is essential

that the goods correspond with both the sample as well as
description.

Implied conditions 
3. Condition as to quality and fitness (Sec. 16(1))

In a contract of sale, there is no implied condition as to quality or

fitness of the goods for a particular purpose.
It is the duty of the buyer to satisfy himself that the goods will be
suitable for the purpose for which he is buying them.

The following points should be kept in mind.

1. where the buyer expressly or by implication makes known to
the seller the particular purpose for which he is buying and
depends on the skill and judgement of the seller whose business
it is to supply goods of such description, then there is an implied
condition that the goods shall be reasonably fit for that purpose.

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Implied conditions 
2. if the buyer purchasing an article for a particular use is
suffering from an abnormality and it is not made known to the
seller at the time of sale, implied condition of fitness does not
apply.

3. if the buyer purchases an article under its patent or other

trade name, the implied condition that articles are fit for a
particular purpose does not apply.

4. in case the ggoods can be used for a number of p purposes,

p the
buyer must tell the seller the particular purpose for which he
requires the goods. If he does not, he cannot hold the seller liable
if the goods do not suit the particular purpose for which he buys
the goods.

Implied conditions 
4. Condition as to merchantability (Sec. 16(2))

Where goods are bought by description from a seller who deals

in goods of that description, there is an implied condition that
the goods are of merchantable quality.
quality

“Merchantable quality” means that which are commercially

saleable.

If goods are of such quality and in such a condition that a

reasonable person acting reasonably would accept them after
having examined them thoroughly, they are of merchantable
quality.

If the buyer has examined the goods and overlooked the defect,
then there is no implied condition of merchantable quality.

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Implied conditions 
5. Condition implied by custom (Sec. 16(3))

An implied condition as to quality or fitness for a particular

purpose may be annexed by usage of trade.

Implied conditions 
6. Sale by sample (Sec. 17)

In the case of sale by a sample, there is an implied condition :

a. That the bulk shall correspond with the sample in quality.

b. The buyer shall have a reasonable opportunity of comparing

the bulk with the sample.

c. The goods shall be free from any defect rendering them

unmerchantable. The defect, should not however be apparent on
a reasonable examination of the sample.

If defects are visible or discoverable by examination there is

no breach of implied condition as to merchantability.

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Implied conditions 
7. Condition as to wholesomeness

In the case of eatables and provisions, there is an implied

condition that the goods shall be wholesome.

Implied warranties 
1. Warranty of quiet possession (Sec. 14(b))

Unless there is a contrary intention, in a contract of sale, there is

an implied warranty that the buyer shall have enjoy quiet
possession of the goods.
goods
If the buyer is in any way disturbed in the enjoyment of goods
due to seller’s defective title to sell, he can claim damages from
the seller.

2. Warranty of freedom from encumbrances (Sec. 14(c))

The buyer is entitled to a further warranty that the goods are not
subject to any charge or right in favour of a third party.
If his possession is in any way disturbed by reason of any charge
or encumbrance in favour of any third party, he shall have a right
to claim damages for breach of this warranty.

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Implied warranties 
3. Warranty as to quality or fitness by usage of trade (Sec. 16(4))

An implied warranty as to quality or fitness for a particular

purpose may be annexed by the usage of trade.

4. Warranty to disclose dangerous nature of goods.

Where a person sells goods, knowing that the goods are

inherently dangerous or they are likely to be dangerous to the
buyer and that the buyer is ignorant of the danger,
danger he must warn
of the probable danger, otherwise he will be liable in damages.

Caveat Emptor 
This means “let the buyer beware” i.e.,

in a contract of sale the seller is under no duty to reveal

unflattering truths about the goods sold.

Therefore, when a person buys some goods, he must examine

them thoroughly.

If the goods turn out to be defective or do not suit his purpose or

if he depends on his own skill or judgement and makes a bad
selection, he cannot blame anybody except himself.

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Caveat Emptor ‐ Exceptions
1. Fitness for buyer’s purpose

Where the buyer, expressly or by implication, makes known to

the seller the particular purpose for which he requires the goods
and relies on the seller’s skill or judgement and the goods are of a
description which it is in the course of the seller’s business to
supply, the seller must supply the goods which, shall be fit for the
buyer’s purpose (Sec. 16(1)).

2. Sale under a p
patent or trade name

In the case of a contract for the sale of a specified article under

its patent or other trade name, there is no implied condition that
the goods shall be reasonably fit for any particular purpose
(Proviso to Sec. 16(1)).

Caveat Emptor ‐ Exceptions
3. Merchantable quality

Where the goods are bought by description from a seller who

deals in goods of that description (whether he is the
manufacturer or producer or not),
not) there is an implied condition
that the goods shall be of merchantable quality.

But if the buyer has examined the goods, there is no implied

condition as regards defects which such examination ought to
have revealed (Sec. 16(2)).

4. Usage of trade

An implied warranty or condition as to quality or fitness for a

particular purpose may be annexed by the usage of trade (Sec.
16(3)).

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Caveat Emptor ‐ Exceptions
5. Consent by fraud

Where the consent of the buyer, in a contract of sale, is obtained

by the seller by fraud or where the seller knowingly conceals a
defect which could not be discovered on a reasonable
examination, the doctrine of caveat emptor does not apply.

Problems
1. A purchases a car from B and uses it for some time. It turns out that the
car sold by B was a stolen car and had to be returned to the rightful
owner. A brings action against B for the return of price. Will he
succeed?

2. A, a farmer, exhibits oats in his farm. B buys the oats in the belief that
they are old oats. In fact they are new. B wants to return the oats and
refuses to pay the price. Decide.

3. A purchased a hot water bottle from a retail chemist. The bottle could
stand hot water but not boilingg water. When it was filled byy A with
boiling water, it burst and injured his wife. A sues for damages. Decide.

4. The sale of pure ghee was warranted only equal to sample. The ghee
tendered corresponded to the sample, but was adulterated with 25%
groundnut oil. Are the buyers bound to accept?

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Problems
5. A lady buys synthetic pearls for a high price thinking that they are
natural pearls. The seller does not correct her mistake. Has she
any remedies against the seller?

6. A sold to B a tin of disinfectant powder. He knew that it would be

dangerous to open the tin without special care but he did not
warn B. B without knowledge of the danger, opened the tin
whereupon the powder flew into his eyes and injured him. B filed
a suit for damages for the injury. Will he succeed?

7. A sells a horse to B. When B goes with the horse, he is arrested by

the police on the charge of keeping stolen property as the horse
belongs to C. Can B sue A, and if so on what basis, and what
damages can he recover?

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