DESCRIPTIVE ANALYSIS OF CONDITIONS AND WARRANTIES IN SALE OF GOODS ACT, 1930

LAW OF CONTRACT- II

PES UNIVERSITY
FACULTY OF LAW

LAW OF CONTRACT- II

TERM PAPER
ON

DESCRIPTIVE ANALYSIS OF
CONDITIONS AND WARRANTIES IN
SALE OF GOODS ACT, 1930

Submitted To- Submitted By-

Prof. Uday Simha N.G. Kanhaiya Singhal
Faculty of Law BA-LLB 2 nd Semester

PES University PES1UG19AL003

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 DESCRIPTIVE ANALYSIS OF CONDITIONS AND WARRANTIES IN SALE OF GOODS ACT, 1930
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Table of Contents
ABSTRACT..............................................................................................................................................3
KEYWORDS...........................................................................................................................................3
INTRODUCTION....................................................................................................................................4
RESEARCH OBJECTIVES.................................................................................................................5
RESEARCH METHODOLOGY...........................................................................................................5
RESEARCH PROBLEM.......................................................................................................................5
RESEARCH QUESTIONS...................................................................................................................5
ANALYSIS................................................................................................................................................6
STATEMENTS........................................................................................................................................6
MEANING AND DEFINITIONS...........................................................................................................6
SALE OF GOODS ACT, 1930.............................................................................................................7
CONDITION............................................................................................................................................8
WARRANTY............................................................................................................................................8
DIFFERENCES BETWEEN CONDITIONS AND WARRANTIES..............................................9
THE RULE OF CAVEAT EMPTOR..................................................................................................9
IMPLIED CONDITIONS......................................................................................................................10
IMPLIED WARRANTIES....................................................................................................................11
WHEN CAN BREACH OF A CONDITION BE TREATED AS BREACH OF WARRANTY?
..................................................................................................................................................................11
CONCLUSION......................................................................................................................................12
BIBLIOGRAPHY...................................................................................................................................14

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 DESCRIPTIVE ANALYSIS OF CONDITIONS AND WARRANTIES IN SALE OF GOODS ACT, 1930
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ABSTRACT
Contract of sale is an agreement between buyer and seller with the motive of purchase
of goods. The statutes having jurisdiction over contract of sale is India is Sale of Goods
Act passed in the year 1930. Terms and conditions of warranties has always been a
negligent part of this contract of sale. Mostly people do not bother to read about them;
therefore in this paper we are going to see the repercussions of the same. Generally,
these conditions and warranties are of two types; namely, implied and express. And
further we need to see the differentiation between the breach of conditions and
warranties and also when the breach of conditions be treated as a mere breach of
warranty? Were buyer unknowingly, waive off the right to sue seller for any kind of
breach in conditions if conditions are not fulfilled or when the good is defective.
Therefore, the understanding of contract of sale and terms and conditions of warranties
becomes very important and in this paper we are going to understand about them in
detail and in very simplified manner.

KEYWORDS: term(s), condition(s), warranty(s), caveat emptor, remedies, Sale of

Goods Act, 1930.

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 DESCRIPTIVE ANALYSIS OF CONDITIONS AND WARRANTIES IN SALE OF GOODS ACT, 1930
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INTRODUCTION
The modern era is a harbinger of ultra modern era, an era of highly complicated and
sophisticated technology, trade and industry. It is an age of industrial transformation.
The philosophy of twentieth century has been replaced by the technology of Twenty first
century and this twenty first century has made all of us customers, we use to buy
several products in our lifetime but very few of us bother to read about all the
documents which we get with the product. Sometimes we do not even bother to fill all
the required documentation, such as warranty card, which is a very important document
for claiming warranty. And in this situation, if we get any defaulted product, we do not
have a locus standi to claim warranty because of lack of documentation. Further, almost
all the time, we do not bother to read about the terms and conditions without which we
cannot claim warranty because those terms and conditions will most of time will be in
very small words and very long to read and in the zeal of buying a new product we use
to skip it. In this paper, we are going to study about these conditions and warranties in
detail.
The sale of purchase of any good forms a contractual relation between the buyer and
seller. This contractual relation leads to certain rights and liabilities between them, and
the breach of those duties or liabilities can further leads to a breach of contract or
breach of warranty, which we will be seeing in detail in this paper.
In a contract of sale, parties i.e. buyer and seller may make certain statements about the
stipulation or the course of trade. These stipulations in the contract of sale can be made
with reference to the subject matter of the sale. These stipulations may either be a
condition or a warranty. The distinction between conditions and warranties in a contract for
sale of goods is an area of study where the boundaries between the two are vague and
blurred. A stipulation can be termed as warranty but sometime it may be interpreted as a
condition. In English law, the law relating to these vital terms was rather in a confused
state till the Sale of Goods Act of 1893 was passed in England.1

The warranty is a pervasive element of both commercial and consumer sales contracts 2;
besides price and quantity terms, it is often the most important item in contract negotiation.
For example, competition for sales in the automobile industry through warranty terms is
particularly striking,3 and in some industrial markets, warranty cost is a major expense for

1
Azmi, S. S. (1985). Conditions and warranties. Cochin University Law Review, 460-474.
2
The economics literature on warranties has primarily addressed consumer warranties. But warranties
are common in commercial transactions as well as consumer transactions. See A. Schwartz & R. Scotr,
commercial transactions: principles and policies 200-06 (1982).
3
See Cooper & Ross, product warranties and double moral hazard, 16 rand j. Econ. 103 (1985); J. Lacko,
product quality and information in the used car market (1987) (bureau of economics staff report to the
federal trade commission).

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 DESCRIPTIVE ANALYSIS OF CONDITIONS AND WARRANTIES IN SALE OF GOODS ACT, 1930
LAW OF CONTRACT- II

firms. Because of the economic significance of warranties, economists have elaborated a

substantial body of literature explaining their role in transactions.4

RESEARCH OBJECTIVES
After reading this research paper, reader will understand the following-
 Indian laws related to terms, conditions and warranties.
 The concept of “Contract of Sale”.
 Breach of warranty and breach of condition with their respective application.
 Revocation of warranty claims.

RESEARCH METHODOLOGY
For researching about the conditions and warranties in this paper, researcher has used
Doctrinal method of study with descriptive method of analyzing secondary data. All the
secondary data used is drawn from reliable and creditable resources such as related
books, thesis work by various scholars, research paper written by various scholars, data
available on creditable online databases and websites, various journal articles published
online, Bare Acts of Indian Contract Act, 1872 and sale of Goods Act, 1930 and other
statutes.

RESEARCH PROBLEM
In this paper, researcher wants to give a detailed and simplified understanding of the
contracts of sale with respect to its conditions and warranties part and the laws related to
same. Researcher wants to resolve the problem of consumers who do not bother read
documents related while purchasing a product and feel cheated afterwards when they are
not able to claim warranty. This paper will strike them to read product documents and
understand them properly.

RESEARCH QUESTIONS
For understanding the answers of research problem, we have to answer the following
questions-
 What are the Indian laws related to terms, conditions and warranties?
 What is the difference breach of warranty and breach of condition?
 What are the implied and express warranties and conditions?
 What is a Contract of sale?

4
Maurer, K. C. (1989). Efficient remedies for breach of warranty. Law and Contemporary Problems , 107-
131

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 DESCRIPTIVE ANALYSIS OF CONDITIONS AND WARRANTIES IN SALE OF GOODS ACT, 1930
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ANALYSIS

STATEMENTS

At the time of Contract of Sale, both buyer and seller communicate with each other may be
directly or indirectly, they made various statements at that time, understanding of which is
very crucial part of contract of sale, for the better understanding of the same we can divide
those statements in following categories-

1. Puff (sales talk): If no reasonable person hearing this statement would take it
seriously, it would be considered as a puff, and no action in contract is available
if such a statement is proved to be wrong. It may also be referred as "puffery".
These kinds of statements are common in TV commercials.5

2. Representation: A representation is a statement of fact which does not amount to

term of contract. Maker of the statement does not guarantee its truth. This gives
rise to no contractual obligation but may amount to a tort, for example
misrepresentation.6

3. Term: A term is similar to a representation, but unlike representation, the truth of

the statement is guaranteed by the person making the statement and therefore,
givingrises to a contractual obligation. For the purposes of breach of contract, a
term may further be categorized as a condition, warranty or in nominate term.7

MEANING AND DEFINITIONS

Many a times a seller of a product makes certain claims and statements about the goods
he offers for sale. These claims may relate to the quality, use, suitability, utility, durability,
etc., of those products. The seller and buyer may agree upon various terms relating to the
subject-matter of the contract of sale. These assurances may be just a mere expression of
opinion of the seller and may not form part of the contract. But, sometimes they may form
part of the contract and the buyer buys the goods on the basis of such assurances. In
such a case these claims and statements have legal effect on the contract. 8 An assurance
or representation which forms a part of the contract of sale is termed as 'stipulations'. All
5
Jain, S. (2015). Contracts of sale: terms, conditions and warranties with special reference to sale of
goods act, 1930. SSRN.
6
ibid, note 5
7
ibid, note 5
8
Sharma, V. (n.d.) Implied conditions and warranties under the sale of goods Act 1930 with reference to
the rule of caveat Legal service India.

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 DESCRIPTIVE ANALYSIS OF CONDITIONS AND WARRANTIES IN SALE OF GOODS ACT, 1930
LAW OF CONTRACT- II

such stipulations cannot be treated at the same footing. Some may be intended to form a
fundamental nature whereas others may be subsidiary or merely an expression of a
personal opinion. On the basis of whether a representation is fundamental or subsidiary, it
ranks as a 'condition' and 'warranty'. If a stipulation forms the very basis of the contract, it
is term as 'condition'. On the other hand, if the stipulation is collateral to the main purpose
of the contract of Sale, i.e., is of a lesser importance, than it is known as a 'warranty'.9

Neither the term “condition” nor the term “warranty” have a uniform meaning in English
contract law. Various case laws has even called “warranty” one of the most ill-used term in
the English legal dictionary. Firstly, “warranty” and “condition” may just be other words for
a term, an undertaking, an obligation and so on, without having any legal significance
attached to them. Secondly, the term “warranties” or “representations and warranties” are
also often used, typically in business sale agreements, to describe statements of fact in
relation to important aspects of the business trade or its assets. Thirdly, “condition” may
refer to so called contingent conditions, (either condition precedent or condition
subsequent). These conditions refer to the order of performance of a contract. Non-
fulfillment of same does not impose liability, but the contract will not be concluded or will
be suspended if the conditions are not fulfilled.10

SALE OF GOODS ACT, 1930

In India law, the statute which deals with conditions and warranties is the Sale of Goods Act,
1930. Sale of Goods Act, 1930 is one of the oldest mercantile laws in India. Sale of Goods
is one of the special types of Contract in general. Initially, it was a part of Indian Contract
Act itself in chapter VII11. Later these provisions were deleted from the Contract Act, 1872
and Sale of Goods Act was passed in year 1930. The Sale of Goods Act, 1930 governs
the contracts of sale of goods and is complimentary to the Contract Act. Basic provisions
of Contract Act are equally applicable to contract of sale of goods.12The term 'Condition' is
defined under the Sale of Goods Act, 1930; “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 contact as
repudiated”13.

9
Conditions and warranties. In sale of goods (pp. 16-27).
10
Sandsbraaten, T. (n.d.). Undergraduate thesis on the concepts of conditions, warranties,
representations and covenants. 1-36
11
Sections 76 to 123
12
Jain, S. (2015). Contracts of sale: terms, conditions and warranties with special reference to sale of
goods act, 1930, SSRN.
13
Section 12 (2)

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According to the Sale of Goods Act, 1930, “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 to a sight to reject the goods and treat the contract as repudiated” 14. In other words,
warranty is a stipulation which is not essential to the main purpose of the contract is, but it
is of a subsidiary or collateral nature. If there is a breach of warranty, the buyer cannot
repudiate the contract, but he can only claim damages from the seller.15

CONDITION
A condition is referred to as, an crucial element attached to the subject matter of a
agreement to sale which is mentioned by the buyer to the seller and is either expressed
or implied while entering into the contract. The buyer has a right to refuse to accept the
goods delivered by the seller, in case of non-compliance with the condition mentioned
by the seller in the contract. Condition may be express or implied.16

If while entering into a contract, the buyer mentions expressly (in words or writing) that
the goods are to be delivered to him before a stipulated date, the date is taken as a
condition to the contract since the buyer expressed it. Whereas, if a buyer contracts to
buy only a red-colored saree for her ‘wedding’ which is to be held on a date mentioned
to the seller, then the time here is the implied condition for the contract. Even if the
buyer doesn’t mention the date of delivery (but has mentioned the date of the wedding
or occasion), it is implied on the part of the seller that the dress is to be delivered before
the mentioned date of the wedding. In this case, the seller is bound to deliver the dress
before the date of the wedding as the delivery of the dress after the said date of the
wedding is of no use to the buyer and the buyer can refuse to accept the same since
the condition to the contract is not fulfilled.17

WARRANTY
A warranty is referred to as additional information given with respect to the desired good
or its condition. The warranty is of subsidiary importance to the contract for its
fulfillment. Non-compliance of the seller to the warranty of the contract does not render
the contract repudiated and hence, the buyer cannot refuse to buy the good but he can
claim compensation from the seller.

14
Section 12 (3)
15
Azmi, S. S. (1985). Conditions and Warranties. Cochin University Law Review, 460-474.
16
Keysor, W. W. (1917). Some phases of conditions and warranties in the law of sales of some phases of
conditions and warranties in the law of sales of goods, St. Louis l. Rev. , 52-62
17
Sharma, S. (n.d.) Implied conditions and warranties under the sale of goods Act.

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For the warranty, properly understood, explains almost the whole range and scope of the
seller’s duties with respect to the quality of the goods. And it is only through an analysis of
the warranty that we can better understand the confusing (because inter-faring)
development of certain other important concepts such as “caveat emptor” (including its
exceptions), the “condition” and “sale by description.” Indeed, it can be truly said that
without a grasp of the law of warranties, the central aspects of the law of sale of goods
cannot really be mastered.’18

THE RULE OF CAVEAT EMPTOR

The Sale of Goods Act states that, “subject to the provisions of this Act or any other law
for the time being in force, there is not implied warranty or condition as to the quality or
fitness for any particular purpose of goods supplied under a contract of sale” 19, brings
the common law principle of Caveat Emptor, which means ‘let the buyer
beware’20. When the sellers display their goods in the open market, it is for the buyer to
make a proper choice of the goods21. In the case of Morley v. Attenborough22 court
observes the rule of “the buyer alone shall be responsible for checking the quality and
suitability of goods before a purchase is made”.23

However, the rule of caveat emptor has certain exceptions to it as mention below-

1. when a buyer brings the reason of buying goods to the knowledge of the seller,
relies on seller’s skill and goods are of a description which is in the course of
seller’s business, it becomes the duty of the seller to deliver reasonably fit goods
to the buyer;

2. Where the goods are sold by using sample and the goods do not match with the
sample;

3. Where the goods have been sold by both sample and description and the goods
match with sample but do not match with the description; and

4. When the goods have been sold by making some fraud or misrepresentation by
seller.

18
Lord, R. A. (1980). Some thoughts about warranty law: express and implied warranties. N.d. L. Rev.,
509-700.
19
Section 16 of SGA,1930
20
Comm. Of Customs (Preventive) v. Aafloat Textiles (I) Pvt. Ltd and Ors. (2009) 11 SCC 18.
21
General offer
22
(1849) 3 Exch. 511
23
Nischaynehra. (2018). Condition and warranty under sale of goods act, 1930. Ipleaders.

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DIFFERENCES BETWEEN CONDITIONS AND WARRANTIES

CONDITION WARRANTY

 A condition is of primary  A warranty is of secondary

importance.
 Breach of condition leads to
termination of the contract.
 The injured party can refuse to
accept the goods as well as claim
damages in case of breach of
condition.
 The injured party can refuse to
accept goods not fulfilling the
condition of the contract.
 A condition can be treated as a
warranty on the wish of the buyer.
 Defined in Section 12(2) of the Sale
of Goods Act, 1930.
importance.
 In case of a breach of warranty, the
injured party is liable to be
compensated.
 The Injured party can only claim
damages in case of breach of
warranty.
 The Injured party cannot refuse to
accept the goods not fulfilling the
warranty.
 A warranty cannot be treated as a
condition.
 Defined in Section 12(3) of the Sale
of Goods Act, 1930.

IMPLIED CONDITIONS
Following are the implied conditions in the contract of sale-
a) Implied condition as to title, etc.24
b) Implied conditions under a sale by description:25
 Goods must correspond with description.
 Goods must be of merchantable quality.
 Condition of wholesomeness.
c) Condition as to quality or fitness for any particular purpose of goods26
 Goods must be reasonably fit for such purpose
 Goods must be of merchantable quality
d) Implied conditions as to sale by sample;27
 Correspondence with sample.
 Buyer’s opportunity of comparing bulk with sample.
 Free from defects and merchantable.28
24
Section 14, of Sale of Goods Act, 1930
25
Section 15, of Sale of Goods Act, 1930
26
Section 16, of Sale of Goods Act, 1930
27
Section 17, of Sale of Goods Act, 1930
28
Pandey, A. (2018). Implied conditions and warranties under the sale of goods Act. Ip leaders.

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IMPLIED WARRANTIES
Following mentioned are the implied warranties-
a) Implied warranty of quiet possession of goods.29
b) Warranty as to goods free from encumbrance in favor of third party.30
c) Disclosure of dangerous nature of goods.
WHEN CAN BREACH OF A CONDITION BE TREATED AS BREACH OF
WARRANTY?
Sale of Goods Act of 193031 provides for certain circumstances where a condition may be
reduced to the status of a warranty. Consequently, the buyer loses his right to reject the
goods. The only remedy he can be having in such case shall be to claim damages. This
shall happen in the following cases:
1. Waiver by buyer:
Where a contract of sale is subject to any condition to be fulfilled by
the seller, the buyer may:
(i) Waive the condition; or
(ii) Elect to treat the breach of condition as a breach of warranty.
We know that the conditions, express or implied, are for the benefit of the buyer. He
has, therefore, the option to waive the breach of a condition and accept the
performance short of it. In that case, he remains liable for the price but may only
recover damages if there is any breach of warranty. Once the buyer exercises his
option, he cannot later on force the seller for its fulfillment.
2. Compulsory treatment of breach of condition as breach of warranty:
When the contract
of sale is not severable and the buyer has accepted the goods or part of it, than the
breach of any condition to be fulfilled by the seller can only be treated as a breach
of warranty. As per Section 42 of the Act32, a buyer is deemed to have accepted the
goods in the following situation:
(i) When he intimates or reflects to the seller that he has accepted them, or
(ii) When the goods have been already delivered to him and
(iii) He does any act in relation to them which is inconsistent with ownership
of the seller. For example, pledges the same goods or
(iv) When, after the lapse of a reasonable time, he retains the goods without
intimating to the seller that he has rejected them, but if the contract is

29
Section 14(B), of Sale of Goods Act, 1930
30
Section 14(C), of Sale of Goods Act, 1930
31
Section 13, of Sale of Goods Act, 1930
32
Sale of Goods Act, 1930

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severable, and the buyer has accepted part of the goods, he can still
exercise his right to reject the remaining goods.33
CONCLUSION
In this paper we have seen various aspects related to conditions and warranties with
respect to their significance, necessity, related provisions in law etc. but theory kept aside
it’s completely upon the consciousness of buyers and seller. Buyers should understand
the need and importance of proper documentation so buyers will not waive of their right to
claim warranties and sue the seller for any breach of condition. Seller, on the other hand,
should be vigilant enough to force buyers do check all necessary documents and the
product by themselves. By the corporative involvement of both buyers and sellers only we
can prevent the law suits in the matter of contract to sale
We do not need to choose between caveat emptor and caveat venditor, they both should
be vigilant. Still we see many automobile consumers, who do not use the external
accessories which are provided by authentic showrooms of company, to save some
money they use to went out and use non-authentic accessories, by which the moment
they install it, lawfully they are waiving off their write to claim warranty in case of any
physical or mechanical damage, because in terms and conditions of the purchase it is
clearly mentioned that the warranty will be only applicable when vehicle is used without
doing any kind of alteration to the vehicle.
The law of sale of goods is obviously in very great confusion and has no consistency
whatever. In its present state, the law provides for one and the same fact-situation different
legal principles giving rise to different legal consequences. By applying the appropriate
conceptual permutations, we may arrive at any result we wish.34
The law of sale of goods regarding terms of contract is batting on a sticky wicket and it
lacks consistency. The distinction derived between conditions and warranties has probably
caused more confusion than assistance. The remedy of rescission is based on broad
principles of justice. The basis of the remedy is that the buyer has not bought what he
bargained for. If the seller has promised in any form that the goods possess some quality
and they do not, the buyer may refuse to take the goods if he has not already taken them,
and may replace or return them if he has previously received them35. He may refuse to pay
the price if he has not already paid, and if he has paid already, he may recover it.
The concepts of express and implied terms show how the conventional outlook towards
contracts may have changed and how the main emphasis was on freedom of contract but

33
Conditions and warranties. In sale of goods (pp. 16-27).

34
Stoljar, S. J. (1953). Conditions, warranties and descriptions of quality in sale of goods. The modern law
review , 174-197
35
Samuel Williston, “Rescission for Breach of Warranty”, Harvard Law Review, 16, No. 7 (May, 1903),
465-475, The Harvard Law Review Association available at http://www.jstor.org/stable/1322808.

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slowly there is a decline in this concept and the concept of implied terms started having a
stronger hold in the interpreting process.36 Earlier the main function of the implied term
was to provide a fair result in exceptional circumstances where the express terms of the
contract could not. Now, 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 very flexible.
After all the research we can conclude that, in order to ensure purchase of an appropriate
and non defective good by the seller, it is suggested that the buyer conveys the purpose
and gives a reasonable description of the goods so desired expressly to the seller.

BIBLIOGRAPHY
ARTICLES

 Azmi, S. S. (1985). Conditions and warranties. Cochin university law review ,

460-474.
 Conditions and warranties. In sale of goods (pp. 16-27).
 Jain, s. (2015). Contracts of sale: terms, conditions and warranties with special
reference to sale of goods act, 1930. SSRN .
 Keysor, W. W. (1917). Some phases of conditions and warranties in the law of
sales of some phases of conditions and warranties in the law of sales of goods .
St. Louis l. Rev. , 52-62.
 Lord, R. A. (1980). Some thoughts about warranty law: express and implied
warranties. N.d. L. Rev. , 509-700.
 Meurer, K. C. (1989). Efficient remedies for breach of warranty. Law and
contemporary problems , 107-131.
 Nischaynehra. (2018). Condition and warranty under sale of goods act, 1930.
Ipleaders .
 Pandey, A. (2018). Implied conditions and warranties under the sale of goods
Act. Ip leaders .
 Sandsbraaten, T. (n.d.). Undergraduate thesis on the concepts of conditions,
warranties, representations and covenants . 1-36.
 Sharma, S. (n.d.). Implied conditions and warranties under the sale of goods Act.

36
Jain, S. (2015). Contracts of sale: terms, conditions and warranties with special reference to sale of
goods act, 1930. SSRN.

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 DESCRIPTIVE ANALYSIS OF CONDITIONS AND WARRANTIES IN SALE OF GOODS ACT, 1930
LAW OF CONTRACT- II

 Sharma, V. (n.d.). Implied conditions and warranties under the sale of goods Act
1930 with reference to the rule of caveat Legal service india .
 Stoljar, S. J. (1953). Conditions, warranties and descriptions of quality in sale of
goods. The modern law retiew , 174-197.

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