Conditions and warranties

Stipulation, Condition & Warranty

• In a contract of sale, parties may make certain statements about the

stipulation or the course of trade. These stipulations in the contract of
sale are made with reference to the subject matter of the sale. These
stipulations may either be a condition or in the form of a warranty.
Sec 12(1)
• A stipulation which is most important for formation of the contract of
sale is known as a ‘condition’ .
• A stipulation which is collateral or of least importance for the
formation of the contract of sale, is known as a ‘warranty’ .
Conditions Section 12(2)
• “a condition is a stipulation essential to the main purpose of the contract, the breach
of which gives rise to right to treat the contract as repudiated.”
• Example: Sohan wants to purchase a horse from Ravi, which can run at a speed of 50
km per hour. Ravi shows a horse and says that this horse is well suited for you. Sohan
buys the horse. Later on, he finds that the horse can run only at a speed of 30
km/hour. This is the breach of condition as the requirement of the buyer is not
fulfilled.
• MEANING OF CONDITION: A condition is a stipulation –
(a) which is essential to the main purpose of the contract
(b) the breach of which gives the aggrieved party a right to terminate the contract. It
goes to the root of the contract. Its non-fulfillment upsets the very basis of the
contract
• In Baldry v. Marshall (1925), A consulted a car dealer and told him
that he wanted to purchase a car for touring purposes suggested that
a Buggati car will be fit for the purpose. Relying upon the statement,
he bought the Buggati car. Later on, the car turned to be unfit for the
purpose of touring.
• The Court observed that the suitability of the car for touring purpose
was a condition because it was so important that the non-fulfillment
defeated the very purpose of defeated the very purpose of purchasing
the car. It was held that A was entitled to return the car and get back
the price paid.
WARRANTY
• It is a stipulation collateral to the main purpose of the contract
• It is of secondary importance. If there is a breach of a warranty, the
aggrieved party can only claim damages and it has no right to treat
the contract as repudiated.
• Sec 12(3) “A warranty is a stipulation collateral to the main purpose of
the contract, the breach of which gives rise to only claim for damages
but not to a right to reject the goods and treat the contract as
repudiated”.
• 13. 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, 1*** 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
fulfilment of which is excused by law by reason of impossibility or otherwise.
Once a condition always a condition
• Wallis v. Pratt, (1911­) A.C .394, in a contract for the sale of a quantity
of the sale of seed described as “common English Sainfoin”, the seed
supplied was of a different kind, though the defect was not
discoverable except by showing the defect also existed in the sample.
Held the buyer was entitled to recover damages for the breach of
contract.
IMPLIED CONDITIONS :
• Conditions as to title [Sec.14(a)] [Rowland v. Divall,(1923)]
• Sale by description [Sec.15] [Bowes v. shand,(1877)]
• Condition as to quality or fitness.[Sec.16(1)]
• Conditions as to Merchantability [Sec.16(2)] [R.S.Thakur v. H.G.E.
corp., A.I.R.(1971)]
• Conditions implied by custom[Sec.16(3)].
• Sale by Sample (Sec.17)
• Condition as to wholesomeness.
 Sale by Sample (Sec.17)
• (1) A contract of sale is a contract for sale by sample where there is a term
in the contract, express or implied, to that effect.
• For example, A company sold certain shoes made of a special kind of sole by
sample sale for the French Army. Later when the bulk was delivered it was
found that they were not made from the same sole. The buyer was entitled
to the refund of the price and damages.